Dual Income Households: How Kids Change The Financial Picture

Raising children can be rewarding, but it’s also a serious financial commitment. A prominent reason to postpone or opt out of having children is to save money, but how much money are these couples really saving?

We wanted to learn how the finances of dual-income households with and without children differ from each other, so we analyzed data from the U.S. Census Bureau’s Current Population Survey (CPS) to compare dual-income households without children/kids (DINKs) to dual-income households with children/kids (DIWKs), both in a single-family setting.

We explored such factors as income, homeownership rates and retirement savings. Though it’s clear more Americans are waiting until later in life to have children or have opted not to become parents at all, are these choices actually helping them financially?

• Dual-income households without kids (DINKs) earn an average of $138,000 per year, nearly 7% more than the $129,000 income of dual-income families with kids (DIWKs).
• DINKs contribute about 9% more than DIWKs for retirement, particularly in states where DINKs earn a higher income, like Connecticut, Illinois and Rhode Island.
• Nationally, 72% of DIWKs and 59% of DINKs own their homes.

A higher income gives you the power to buy and save more. According to the CPS, DINK households earn an average of $138,000 annually – nearly 7% more than the $129,000 annual average for DIWK households.

In certain states, DINKs out earn their DIWK counterparts by an even more considerable margin. As you can see, DINKs in Connecticut earn 70% more than DIWKs, and DINK households make 62% more than DIWKs in Rhode Island.

That’s not the case in every state. In Nebraska and Hawaii, DIWKs bring in 103% and 85% more than DINKs, respectively.

When household expenses are higher, saving for retirement can be an even greater challenge. Raising children can cost tens of thousands of dollars per year, which is one of several expenses that may limit one’s ability to put away money for retirement.

With a higher income, DINKs are able to save about $4,800 per year on average, which is 9% more than the $4,400 that DIWKs put away each year for retirement.

In states where DINKs have a higher income than DIWKs, such as Connecticut, Illinois and Rhode Island, DINKs save significantly more for retirement. DINKs in Connecticut, who out earn DIWKs by 70%, save an average of $15,900 for retirement, which is over four times as much as the $3,100 saved by DIWKs. DINKs in Illinois and Rhode Island save 93% and 50% more than DIWKs, respectively.

It’s worth noting that earning more doesn’t always mean contributing more to retirement savings. In Montana, Ohio and North Carolina, DIWKs earn less than DINKs, on average, but are contributing a larger percentage of their income toward retirement.

This might indicate that families with children, particularly those in Montana, Ohio and North Carolina, are focused on building future financial stability and generational wealth. However, that’s speculation based on the data.

DINKs may earn a higher average income than DIWKs, but it’s dual-income households with kids who are more likely to own their homes. Across the U.S., 72% of DIWKs own their homes, compared to a homeownership rate of 59% among DINKs. In all but 11 states, DIWKs are more likely to be homeowners than DINKs.

This data demonstrates that dual-income parents are more inclined to buy their homes than dual-income households without children. There are several possible explanations for why DIWKs own their home more often than DINKs.

DINKs may prefer the freedom and flexibility of renting over buying. Also, unlike DIWKs, they don’t have to consider the impact moving to a new home might have on a child’s schooling and social life.

Homeownership also offers more stability and opportunities to build wealth, which can make buying a house a good investment for households with children, particularly because it costs upward of $300,000 to raise a child through age 17. Finally, homeownership can promote financial security, allowing owners to build equity and borrow against that home equity if needed.

Homeownership rates among DINKs and DIWKs vary drastically by state. In Mississippi, 93% of DINKs own their homes – the highest ownership percentage among dual-income households without children. On the other hand, just 32% of DINKs in Washington, D.C., own their homes, while the ownership rate among DIWK households is 74%.

Nationally, households with children are more likely to own their homes. Nevertheless, each state and metro area can follow a different trend.

For many Americans, owning a home remains a key financial milestone, regardless of whether there are kids in the picture. Among DIWKs, homeownership rates are 13% higher than DINKs, despite having a lower average income and managing the additional expense of raising children. So, while the average DINK household might earn a little more and save more for retirement, most DIWKs seem to prioritize homeownership and have enough income to buy a home.

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We used the Current Population Survey from the U.S. Census and explored households with dual incomes among people ages 22 – 35 to compare DINK to DIWK households. DIWK households have at least one child living with them.

All values are weighted using the household weights provided by the U.S. Census.