Dual Income: Don’t Chase the Money

Personal Finance Advice takes a unique approach on the dual income scenario.  In her latest post, she asks the question, “Is it worth it for both people in a relationship to work for the money?”

Starting off, she analyzes what happens to the income added on as a second wage and how federal taxes affect it.  This rudimentary personal finance knowledge serves as both a good introduction as well as a detailed highlight of the new take home pay.  After calculating up a typical scenario, she shows the real money.

But let’s look at it from today’s standpoint. Throw in some state taxes (assume 3%), and if you make $60k per year and your spouse makes, let’s say $40k, and right from the start the couple only gets to keep 65% of their second pay-check, or about $26,000.

Continuing on she takes child care costs into the equation.  Reducing the already meager take home, it quickly becomes apparant that perhaps the added stress is not worth it.

Providing both sides of the coin, she does offer a few exceptions.

There are, however, exceptions to the rule. You may find extremely cheap childcare (perhaps a family to care for your children or your work provides it at no cost). You may be able to fund a 401k with most of a second income, to save income taxes. You may be able to find better benefits with a second job, which could save thousands a year. You may not mind a life of working opposite shifts to avoid daycare costs. There are many, many things to consider.

All this makes me want to marry a tax accountant and stay at home working on passion projects.  Read the full entry.