You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.
Rob: Dual-Income-No-Kid couples, also known as DINKs. We all know them, and at times, we envy them.
Roma: Raising a kid from birth to when they turn 18 costs about $350,000 outside of the money. Having kids also eats up a whole lot of time. So what kind of lifestyle, career, housing, and financial choices are dual-income no kid couples making?
Rob: Welcome to Stress Test, a personal finance podcast for Millennials and Gen Z. I’m Rob Carrick, personal finance columnist at The Globe and Mail.
Roma: And I’m Roma Luciw, personal finance editor at The Globe. In the past, we’ve talked about the high cost of children, from child care to fertility treatments. Now, we’ll shine the light on financial considerations for those who are childfree by choice or by circumstance. Rob, what are some of the major ways the lives of dinks are different once this big expense is off the table?
Rob: Well, I think the biggest difference is they do not have what is turning out to be a lifelong commitment to supporting and helping your kids. I mean, the cost of parenting starts off with, you know, getting all the equipment you need to have a baby, and then there’s daycare, and then there’s activities, and then there’s university, and then there’s this emerging aspect of parenting, helping your adult kids, helping them with rent, helping them with groceries, helping them buy a house, helping them with daycare, helping them with summer camp fees. It’s it’s turning into almost a lifelong commitment. What are your thoughts?
Roma: I’m going to also do a shout-out for the cost of feeding teenagers being a major crippling expense. One of the things that strikes me is that without kids, you have so much more flexibility. You can plan to live in homes that are not close to a good daycare school. You don’t have to worry about uprooting kids from their friends and activities. You can choose not to own a home to be a renter. You can choose to buy a place somewhere that you like. You can choose to take that money that would have gone towards saving for college and university and put it perhaps towards working less or working harder. So it really seems to boil down to a whole lot more choices.
Rob: Yeah, we don’t want to say that people without kids are automatically well-off or affluent, but they do have more money than people with kids. You know what? They also have more predictability. They’re not going to face soaring daycare costs. They’re not going to find out their kid wants to play hockey with all the costs of that. They’re not going to find out. Their kid wants to not only go away to university, but they want to go to a university in another country or another continent. And you think, how could we help them with that? So I think it provides more money, more flexibility, and more predictability.
Roma: The thing that really stands out to me is how much more agency you would have as a woman. I know that a lot of dads and parents are stepping up in ways they never have before. But we know that women still tend to carry the bulk of the parenting responsibility and that their careers tend to suffer when they have kids for a lot of reasons. So imagine having that taken off your plate. You can choose as a woman to work very hard to climb that career ladder, to focus on making money. Or you could choose to work less hard and pursue something that’s your passion. That might not be as well-paid, but whatever the choice you make, the reality is that you would have that choice. Now, Rob, there are also repercussions for things like estate planning, for the way that you set yourself up longer term. What are some of those?
Rob: Well, I think a lot of parents expect that as they age and need more help, their kids will provide that help and that when they need someone to take on power of attorney for health and financial decisions, their kids will be that person. And when they need someone to execute their will, their kids will take that on. And of course, it has to be pointed out that there are ways around not having a child to be your executor, have your powers of attorney. There are corporate executors and divisions at big banks. If you have a pretty sizable estate, I think that would be a great option for you.
Roma: After the break, we’ll hear from one woman who chose the bank lifestyle in large part because of the money.
Malika: My name is Malika. I am 36 years old, and I live in Ontario.
Rob: Malika is a creative director at an investment firm. Her husband is a mechanical engineer turned entrepreneur. They’ve been together for about seven years.
Malika: When I and my husband started dating, I knew that I did not want to have children. And where he came from wasn’t a question that you asked. It’s a thing that you do like. It’s just, yeah, people get married, and they have kids, and there was no sort of second thought about it. When we started dating, it was important for me that whoever my partner was, they were on the same page. And we talked about it, and I kind of asked him a question, and I said, Why do you really want to have kids? And his answer was Because that’s what you do. And that answer wasn’t good enough. And we had longer conversations about it, and we both agreed that we don’t see ourselves having children in our lives.
Rob: Malika has always felt like her life was fulfilled without kids, and she doesn’t want to change her lifestyle.
Malika: I remember people telling me this, oh, your motherly instinct is going to kick in, or something’s going to happen, that it’s going to be a switch that’ll flip. And then that would be the time that you would really want to have kids. And I kept waiting for that switch to flip, but it really never happened. Weirdly or thankfully enough, it didn’t happen for my husband either.
Rob: That’s in part because they decided to focus their time and money on their careers. Malika feels that it would have been more difficult if they had kids.
Malika: I think the first thing would be my husband. Starting his own business and becoming an entrepreneur would have been quite impossible because when you become an entrepreneur, there is a whole lot of uncertainty, like the finances where you’ll end up in life. And I think because we weren’t planning to have kids, he could make that leap of faith, do what he wanted to do, and feel fulfilled in his career. And I think similarly for me, I put in a lot of time in my job, in my work, and I don’t think I would have been able to do that had there been a child in the picture, or like if we were planning to have a child and you could plan for the whole mat leave and then that one year in your career like that kind of sets you back. And I don’t think I wanted that.
Rob: Being child-free also enabled them to buy a second home in Europe.
Malika: We decided that we wanted to retire in Portugal after a whole bunch of deliberation about where we see ourselves as older people. And we thought that Portugal was the place we wanted to be in. And we bought a retirement home there. And I don’t think that that would have been possible had there been a child because it needed a lot of financial resources to be pooled and together to kind of invest in that property. And it’s it was us saving up for our future. And as you know at the time, real estate only gets more expensive as time passes. So I think if we would have pushed that because or if there was a child in the picture, then that would have been kind of more difficult for us to achieve.
Rob: Most people in their mid-thirties aren’t buying retirement homes, but the rest of Malika and her husband’s expenses are more relatable.
Malika: So my husband and I are very different when it comes to our spending habits. He does not like eating out too much. He does not like going to concerts. He likes his business. It is his lifestyle, I guess. And he loves to invest whatever back into his business, whatever he makes me. On the other hand, I love going out with friends. I like trying new restaurants. I love going to concerts. The one common factor between me and my husband is that we love to travel and we love to explore places, and that requires a certain amount of finances and funds that we allocate each year towards that.
Rob: The pair devotes a lot of time to financial planning.
Malika: I love the fact that both of us talk about our yearly goals. We sit down and figure out what our early goals are financially, and we are an interesting couple in the sense that we don’t share our finances. We both have our personal bank accounts, and we kind of have a split wife account, and we put everything in there, whatever we whoever spends, and then everything is 5050. It just helps us track our finances. And we have a thing where we, let’s say, I can afford something, and my husband doesn’t like the other way around. We just don’t do it. We have an understanding. So we actually sat down a month ago, and with the interest rates being as high as they are and our property, who are current residents in the go, it’s coming. The interest is coming up for renewal. We had a fixed interest rate up until now, but next year, we’re going to be up for renewal, and we know that it’s going to cause a major dent in our savings. So we’ve decided we’re going to save up a whole bunch by next year and pay off a chunk of this mortgage so that we are a little bit stress-free. And I think in the longer term, eventually, we would want to be mortgage-free in about 8 to 7 years. Fingers crossed for at least one property. Like we want to not be in a situation where we are paying the mortgage for two properties.
Rob: While interest rates are a worry, Malika isn’t concerned about the common question faced by many dinks, “who will care for them when they age”?
Malika: These are a lot of things that people tell us or ask us. Hey, you know, your children will take care of you when you grow older. So you don’t always have to think about the fact that you’re spending. It’s almost like an investment. And both my husband and I kind of feel that you should be having a child, thinking that they’re going to take care of you. Having a child is your decision, and it is not guaranteed that they will do well enough in life so that they can support you when you’re older. And that shouldn’t that shouldn’t be an expectation from children. That just fundamentally doesn’t work for us. And what both of us would bank on is what we can control and what’s known. So we’re taking calculated steps, making sure we have a home to stay when we are older. The kind of house we bought, it’s actually a single-floor house. It doesn’t have any stairs, considering inflation and the cost of living. And I also know that people live longer now, so you have to be prepared for a lot of things. But we are hoping that we’ve covered the basics as much as we can and not banking on the future. Imagine being able to help support this when we are older.
Rob: Our next guest may not be a big spender, but she chose the DINK lifestyle because of the financial and lifestyle freedom that comes with it.
Sarah: Hi, I’m Sarah. I live in Toronto, and I’m 37 years old.
Rob: When Sarah was younger, she assumed she’d have kids, but she and her husband had extensive discussions about whether to have children before deciding to opt out.
Sarah: Do we really want to? I hesitate to use the word phrase “mess up”, but we’ve got a good thing going on that we really want to up and the kind of the rhythm of our lives. Right. We have a choice in this matter. The kid doesn’t. So we ought to be really, really, really sure. I really like our lives now as it is. I think I’d rather regret not having a kid than regret having a kid. So to make a long story short, really, it was the financial circumstances We take a hard look at, you know, what are our goals for the next ten, 20, 30 years? Do we want to still be paying off a mortgage? And, you know, if we had a kid or more, how are we going to afford that? We still want to travel. We still have things that we want to do outside of just work. You need to look at what you value and where do you want to see yourself? How do you position yourself in such a way that your chances of being happy with your circumstances are going to be maximized and keep your options open? I think it’s hard to kind of balance all of that sometimes.
Rob: Sarah and her husband earn just over six figures.
Sarah: $100,000 sounds like a lot, and it is a lot, especially compared to people who are making the average salary in Canada. But if you’re providing support, financial support for family members, whether they’re parents, grandparents, or if you have kids, 100,000, you know, per person in a couple doesn’t go quite as far as you probably think it would or should be. Don’t have an extravagant lifestyle. So really, when I had that 100,000 annual salary kind of as that stretch goal, it was to have a secure life financially and also be able to plan ahead and have choices and choices that would hopefully be a bit of fun at least but would provide me with the opportunity to live as I wanted, not have to make choices because I needed to balance a budget or try to make ends meet one way or another.
Rob: Sarah provides financial support of about $2,000 per month to older generations of her family. Even though she seems happy to do it, it has shaped her views on those who bank on their children’s help as they age.
Sarah: I don’t think it’s fair to expect the younger generation to bend over backward sometimes to accommodate the older generation. It’s great if they can and want to help out and do so to the folks who say, Oh, who, look after you, who will visit you, who will support you, you know, socially, financially or otherwise, who’s going to lend on your shoulder? The question I ask is like, why are you relying only on family? Families are getting smaller and smaller and have been for quite some time. It’s not like you have half a dozen siblings to spread the load around.
Rob: For Sarah deciding to remain child-free has meant flexibility and freedom. So, where does her extra cash go?
Sarah: The fun stuff would be eating out. Toronto is such a wonderful culinary landscape, not just in downtown Toronto or Midtown, but when you venture further afield. There is such a variety of gems and your local plazas and things like that and swapping tips of where to find the best biryani or the roti. Part of the thrill is the hunt. You know, you find something, and it’s not crowded to the rafters. Get to meet up with friends. It’s that social aspect. So some other things that are discretionary, but to me really aren’t are memberships for the Rahm and HBO going to the Toronto Symphony Orchestra? They have rush tickets for anyone who’s like downtown proper. They’re an amazing deal. We definitely would have more flexibility doing quick trips, you know, spur-of-the-moment type of things. We’ve been to the UK, New Zealand, Southeast Asia, kind of hopscotch through a couple of countries there down to the Caribbean and the states more for for like work. But it’s nice to add a couple of days here and there. I would love to continue traveling and traveling further afield. I would love to possibly retire early. What I’m really looking forward to is being able to have that freedom to choose to work in whatever capacity, you know, whether it’s seasonal. Not having the child means I don’t have to look after and put someone else’s best interests and needs ahead of mine. That’s just like my orientation. If I had to or if I had a child like that, it would take precedence. So it’s freeing.
Rob: Deciding to be DINKs isn’t something that Sarah and her husband took lightly. But over time, they’ve become more comfortable with being the cool aunt and uncle.
Sarah: I have friends who are parents, and that is not their sole identity, but it brings them so much contentment. And sometimes, it’s a question of whether it is selfish to want to continue investing in myself or if that is actually the more responsible thing to do. I’ve been told many, many times, Oh, you know, you’d make such a great mom. And it reminds me of something my friend said. It’s because I’m a good cook. That doesn’t mean I want to run a restaurant.
Rob: After the break, we hear from a financial planner about how to manage your finances if kids aren’t in the picture.
Roma: Jay Zigmont is the founder of Child Free Wealth, a financial planning firm that serves people who don’t have children. He’s based in the U.S., in Mississippi. Jay, you’re financial planning firm, specializes in people who are childfree. Why do you think childfree couples need a financial plan that’s specific to their needs?
Jay: The reality check is being childfree or probably childless changes just about everything about your financial plan. The way I look at it, you first have to plan for your life, then your finances. For example, child-free folks don’t want to pass on money and exploration. Retirement may not be as much of a priority. Life insurance is as big a priority. It starts everything as you go down the list. My wife and I are child-free, and I started researching this because, in the Certified Financial Planner literature, there’s no mention whatsoever of each offering. So my real look at this was really I mean, my wife weird, or there are others out there. Turns out there are a lot of us, but the financial literature just assumes everybody has kids, and it’s good to have kids.
Roma: For those who are choosing the child-free lifestyle, what are the most common reasons?
Jay: Yeah. I asked this in a study I did. I want to dive into why people choose to be child-free. The interesting thing was most people had more than one answer. The top reason was actually just they never wanted kids. You know, something like 30%. But then it goes on to interesting things like 30% said finances, 27% said freedom or environmental concerns, and medical concerns do not want to pass on generational trauma. These are huge reasons. And what we’re seeing is more people going, huh? It’s something I can choose to have or not. And it’s just a default choice that I must make.
Roma: When you said that 30% cited financial reasons, what were some of the financial reasons they cited?
Jay: There’s an interesting area of this research, and I don’t have great data that back up, but there are a lot of people talking about coming up for me and seeing their parents struggle in saying, Hey, I don’t want to do that to someone else. And that’s not exactly financing. I want to make less money, more money, but it’s more this quality of life. And then we ask and get the discussion you all just published a study looking at is like $20,000 a year to have kids. It is just expensive. Yeah. I think, you know, when you look at housing costs and wages nowadays, it’s tough to have kids.
Roma: Okay. So tell me about what the financial life and the lifestyle are of a couple that does not have children.
Jay: The way we say it is, that living a life of child-free wealth means you have time, money, and freedom to do what you enjoy. That doesn’t make you automatically rich. So that’s one of those things that you throw out there. It’s not like there are checks that come from the sky when you choose not to have kids. The income disparities are still there. But what happens for couples is they start being able to embrace different things. For example, we have a concept called the Gardener in the Rose, where one person is growing, and the other provides support. My wife and I have no braces. Recently, she got a great job offer, and we moved 1200 miles away for our daughters—no big deal. We loaded up the dog and went. That’s a level of flexibility that you won’t see in parents.
Roma: I’d love for you to give our listeners some sense of what a child-free couple would plan to do with their money, their time, and their freedom, how that might look different from a couple forced to make certain decisions because they’re also planning for other human beings.
Jay: Absolutely. So there are two parts of this that are most common. One, a lot of childfree folks embrace what we call “Die With Zero.” So they’re trying to have their last check bounce, and they’re trying to invest in themselves. And that investment takes a lot from tracks like, for example, I have a couple where somebody quit their job, took six months of sabbatical, and now is becoming an author and writing books. They’re investing in themselves and what they want to do, which is a different path from where we even have discussions about investing themselves, especially in the stock market. Sometimes the answer is to go back to school, have fun, and do what you enjoy, even though it’s not the best financially.
Roma: What about lifestyle? What kind of spending or lifestyle decisions do you see that are different outside of career and saving and investing?
Jay: I think the biggest one you’ll see is the nomadic. For example, the editor for my next book, and she and her dog live in an Airbnb for a month in different locations all across the country. And every time I talk to her, she’s somewhere different. And that’s some of the norms, whether it’s got van life or living internationally or whatever it is; it is just a point where you can say, “Hey, I’m going to pick up my dog and go”.
Roma: One thing that stands out for me as a working parent is how much time this would free up for building a career, especially for women: equal work, career, continuity. You wouldn’t have to take time off to give birth. Fewer interruptions, you know, for things like sick days, more possibilities for advancement. It strikes me that a woman would have so much more agency over her life. And is that something you hear about from child-free couples?
Jay: They do have more flexibility. But here’s the inverse of that. So the Society of Human Resource Management found that childfree folks are often expected to cover vacations or holidays or expect to work extra hours because they don’t have kids at all. So it actually becomes an issue of equity and saying, hey, you have a choice to do different things with a career, but you shouldn’t be forced to just because you don’t have kids at home.
Roma: Mm hmm. On the other hand, it would also make you more available to work things like overtime and put in the kind of hours that are expected to get into more senior positions.
Jay: It does make the time available, but I want to caution you that just because you are child-free doesn’t mean you have to climb the career ladder. So that’s part of the discussion we have with our clients. We call it the dimmer switch for work. Define the right amount of work to the right level that you enjoy because childfree folks aren’t trying to drive up their net worth to pass on to intergenerational wealth. So I’m on that corporate ladder, which may not be as important to the point where we talk about and say, hey, what job would you do for free? And you should just get paid for it. So it’s not always about, Hey, I’m childfree, I need to achieve more. I can focus on what brings me joy and get rid of things that don’t.
Roma: So freedom seems to be a big theme. Let’s talk a bit about financial freedom because that is part of the equation. Exactly how much money do you estimate that a couple can save? Or do you see with the couples that you work with how much money they are saving by making this kind of a choice or having that choice thrust upon them?
Jay: Yeah. So the public stats are somewhere around $300,000 to raise a kid for 17 years, but that doesn’t mean they’re saving it. Yeah, they are. They have a different approach to finances because if you have expensive kids, you have to earn that money. The interesting part about the data says net worth wise childfree folks don’t have a higher net worth than the general population. You know, it’s close. It might be within $1,000, a couple of thousand dollars, or others. So if you’re seeing a hit on the higher net worth, that means they don’t necessarily have higher savings. There’s a little lower rates of debt in child-free folks, but it’s not like, hey, it completely changed our numbers because your life changes to go with it.
Roma: Are there any investing themes that you see that are specific to couples without kids?
Jay: I think from an investing standpoint, what changes is the goal is not to have the most amount of money at the end. So, for example, a lot of the financial planning software that does what I call Monte Carlo simulations are all trying to push you to not run out of money. Well, that’s the inverse of the way time for folks want to do it. So we can actually make different choices with our money. The way I say this is we try to keep your finances boring so your life can be amazing.
Roma: Jay, are there any expenses that child-free couples tend to incur that couples with kids don’t?
Jay: Yeah, the most obvious one is going to be the planning for long-term care and paying somebody to be that executor or power of attorney for you in some of those costs. You’ll have people expect their kids to do it. I think the flip side of that is parents, hey, having a kid doesn’t automatically check those boxes for you. And just because you have a kid doesn’t mean your long-term care is paid for or they’re going to be your executor. We’re just more aware of it, and it’s part of our plan.
Roma: What about disability and life insurance?
Jay: Yeah, life insurance is one of those. Everybody says you need 10 to 12 times your income. Your life should not appear childfree for the childfree folks unless you have like some big debt. It’s got to be covered or a business concern. You could probably skip life insurance, but disability insurance becomes much bigger because you don’t have a next generation to rely on.
Roma: What’s the single most important piece of advice you’d give to a couple without kids?
Jay: If you’re looking at your finances and you’re working with a financial planner, investment advisor, or whatever. Ask them how your financial plan is different because you’re child-free. If they say it’s not different, you need to walk away and find somebody else. If, on the other hand, they say, Oh, you’ll change your mind, you still need to walk away. You need to find somebody in your life who understands you. It’s okay if I say, Hey, I don’t know if it’s different, or we’ll figure that out. But you need to get advice that fits you. Because most nearly all financial advice assumes kids are part of the picture.
Roma: No matter why you don’t have kids, it’s a reality that changes your finances. You’ll have more freedom, flexibility, and discretionary income. It’s an advantage you don’t want to waste by simply spending more money. Rob, what are your takeaways?
Rob: One. Not having kids gives you more work. Freedom. You can prioritize your career, move around a lot, or take meaningful work that pays less. Two. Go easy on insurance. With no kids as dependents, you don’t need as much coverage. And three. Aging will be complicated. With no kids, you may need to pay for help around the house as you age. Also, you’ll need to find people to take on power of attorney for health in your finances and execute your will.
Roma: Thank you for listening to Stress Test. This show was produced by Kyle Fulton, Anna Stafford, and Emily Jackson. Our executive producer is Alisha Sawhney. Thank you to Sara, Malika, and Jay for speaking with us.
Rob: You can find Stress Test wherever you listen to podcasts. If you like this episode, please give us a five-star rating and share it with your friends.
Roma: Next week on Stress Test, more homeowners are struggling to make their mortgage payments. Soaring interest rates have doubled or even tripled those payments. We’ll dig into how tough it is for new homeowners and how people are coping.
Rob: Until then, find us at the Globe and mail.com. Thanks for listening.