Child-free couples warned they are making huge money mistakes parents never would
Millions of households across the UK are making mistakes around their finances, despite having more money to play with than their child-rearing counterparts.
Child-free couples could be saving up to £166,000, but millions of these households across the UK are making worrying financial errors.
Approximately 4.1 million households in the UK have opted not to have children, joining the double-income-no-kids or single-income-no-kids movement, also known as DINKs and SINKs.
This decision could save them over £12,000 per year, based on the current cost of raising a child, but they are making some concerning mistakes that parents would never make.
Research from Legal and General has shown that while DINKs and SINKs have more funds to play with, they're far less engaged with their finances and less financially savvy as a result.
As children often drive many protective financial decisions, both DINKs and SINKs may not even be considering things like insurance, which most parents refuse to go without.
Around 67% of DINKs and a shocking 87% of SINKs do not have life insurance, citing their lack of dependents as a deciding factor, but both groups are choosing to miss out on other measures that would protect them as individuals. A total of 76% of DINKs and 82% of SINKs have ever had income protection while 67% and 80% respectively have also never had critical illness cover.
Taking into account the costs of raising a child until they turn 18, DINKs are preserving a massive £166,000 whilst SINKs are safeguarding around £220,000. Both segments of society feel more comfortable with their financial decisions and have higher confidence in their financial future despite making considerable financial mistakes as compared to those who are parents.
One could attribute this confidence to the fact that 73% of DINKs and 69% of SINKs are more inclined to have set aside an emergency fund compared to other households, giving them some financial cushion to fall back on. Yet, even with more substantial reserves than their counterparts who have kids, these people tend to be less engaged with their finances.
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Worringly, a significant proportion of both DINKs and SINKs do not keep tabs on their financial situations or review budget strategies that might enhance their lifestyle.
Legal & General Retail's Chief Customer & Strategy Officer, Paula Llewellyn, said: "SINKs and DINKs are feeling more financially secure and there's a real opportunity for these groups to remain so right through to retirement. But there's also a risk that the confidence that comes with having financial security, can result in poor financial engagement."
While she recognised why some individuals without dependents might not see insurance as crucial, she emphasised the advantages of having cover: "There are many benefits to products like Life Insurance, Income Protection and Critical Illness if you are single or do not have children. If you have Critical Illness insurance, for example, and you find yourself needing to claim due to a serious illness, your cover could pay for your living expenses if you are unable to work."
