Relying on both incomes to survive
According to a new study by protection specialist LV=, 3.2 million couples in the UK rely on both incomes to meet their household expenses.
The research found that nearly half of all couples are dependent on both incomes to pay for essential living expenses.
They also found that a third of households would have to make significant lifestyle changes if they lost one of their incomes
Nearly half of all cohabiting couples are dependent on both incomes to pay for essentials, with one in seven couples admitting to struggling even with two incomes.
LV= have coined the term DINOs to describe couples in the position of needing both incomes to cover household expenditure, which stands for ‘Double Income, No Options’.
They found that while some couples depend on dual incomes to meet essential expenditure, an additional three in ten couples need a double income in order to maintain the quality of their lifestyle.
A third of couples admitted they would have to make substantial changes to their lifestyle if one partner was unable to work.
Coping strategies varied, but included cancelling holiday plans, sacrificing gym membership or even downsizing their home and asking for additional help with childcare.
Other strategies for dealing with the loss of one income included changing shopping habits to start shopping at a cheaper supermarket.
This study highlighted a couple of really important Financial Planning considerations.
In an ideal world, nearly half of couples surveyed said they would prefer it if one partner could run the house and the other could bring in a wage.
When we work with our clients to construct and maintain Financial Plans, we are able to model a scenario which demonstrates whether this goal is affordable; not just in the short term but over a lifetime, considering the impact it might have on future financial goals.
Another important finding was the worrying lack of income protection insurance.
Most of the households relying on two incomes had no income protection insurance in place, which would leave them vulnerable should one partner become ill or injured and unable to work.
Financial Planning allows us to easily identify insurance gaps, such as the need for income protection insurance, which would prevent the need for dramatic lifestyle changes in the event one partner lost their income.
Do speak to us if you identify with the DINOs in this study and want to better understand your options for living on one income.