Over at Grumpy Rumblings, NicoleandMaggie posed the question of what readers would do if their incomes doubled. This is, obviously, a nice question to be able to ask. The one who’s the econ prof recently faced this question because her husband got a new job. They’re pre-paying the mortgage, beefing up contributions to retirement accounts, taking on deferred home renovation projects, and eating better cheese.
It got me thinking about what changes I have made over time as my income has changed. When I was in my early 20s, I doubled my income twice year over year — it helps to be starting from a low spot! But the biggest change I made was that I saved more. Income from self-employment never seems particularly stable, so I wasn’t really willing to take on any financial commitments other than a lease. As my income grew, I felt more relaxed about that lease. I’d have enough in the bank to pay for the full year if I earned nothing. I could cover a month when my second roommate lost her job and couldn’t pay the rent (she paid me back later). But I still shopped pretty carefully for groceries, clothes, etc.
So what would I do now if my income doubled? As I thought about this, I realized that my answer was kind of revealing: I think it depends who was the source of that doubling.
My husband has been working longer than I have in a better-paying field and our standard of living generally owes more to him than me. If the doubling were due to my husband, I’m guessing we wouldn’t do anything all that different. We already live on less than we make, and we invest the rest. There’s nothing wrong with that — there’s nothing we particularly need that we don’t have. This is a very fortunate place to be in, and I am well aware of that.
But what if I were the one who doubled our household income? This would mean the writing career had taken off quite a bit! I don’t quite see What the Most Successful People Do Before Breakfast being turned into a television series and movie franchise starring Sarah Jessica Parker, but I guess we never know. In this mental game, when the money was somehow “mine,” I thought of plenty of things I’d like to do financially. I’d structure our lives so I could go off sometimes and write for longer periods of time. I’d like to invest in start-ups. I have way more ambitious charitable goals.
Anyway, reflecting on this, I think it’s interesting what this may say about me and my mindset about money, which seems a bit more retro than I like (and, I’d point out, doesn’t reflect my husband’s mindset — he has certainly not claimed that because he out-earns me, his preferences outweigh mine. I seem to be assuming this all on my own).
What would you do if your income doubled? Would it matter if it were you or your partner (if you have one) who was the source of that doubling?
Photo courtesy flickr user uyht
Thanks for the link and continuing the conversation!
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I have to say that income doubling is a lot more fun to deal with than income being cut by 40% which is what we were facing before.
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We really do think of our income as one joint thing, which is not something I would have imagined growing up. DH just doesn’t worry his pretty little head about money at ALL (he has an allowance for his own spending), so that makes it easy to not really think of the source of the income when making decisions. I do have to say that there’s a lot less pressure not being the sole breadwinner, and I like that. (Post on that in the future.)
Oh, we’re also upping our charitable contributions, including spaying or neutering etc. the three feral kittens we caught this morning. Unfortunately mamacat is avoiding the traps and we caught an opossum instead.:(
I think mamacat is only somewhat feral, but she isn’t touching distance yet. This is going to bother me all week if not longer. I don’t want her to have more babies.
@NicoleandMaggie – you feel less pressure now that it’s not just you, and you have tenure! Imagine the pressure of being the sole breadwinner without that.
Yeah, I remember when my BIL was unemployed during the recession (his job was in the auto industry)… and my SIL wanted to continue being a SAHM. No pressure there. There’s something to be said for dual-earner families in terms of security, even ignoring the income.
i don’t want to put exact #s on it, but we have experienced this recently – fairly drastic shift. this is probably not uncommon in 2-physician households where training is completed at the same time. thus far, we have spent it on a) relocating to a much pricier place to be near family + enjoy good weather; b) tripling the amount we spend on childcare, which includes outsourcing a lot of day-to-day chores; c) some necessary home renovations (but nothing fancy . . . still kind of love IKEA); d) paying down loans; e) nothing particularly glamorous, although i was happy not to have to worry as much when buying holiday gifts this year.
i still worry we aren’t saving NEARLY enough but i don’t think we have enough months of data to really gauge what the ins/outs look like yet.
oh, and as to whether the extra $ buys more happiness? yeah, i think that the answer is . . yes. i AM happier not having to do cleaning and cooking and laundry most of the time, especially. i am happier feeling really good about my childcare choices and not rushing to pick up / drop off at daycare every day. and i am happy not to have to stress about gifts, donations, small fun purchases. (i also like my job more than my training, so that contributes too!)
Because I will (I will! I will!) defend my PhD in 2014, I have actually thought about what I’ll do when my income jumps. I know I’ll up my giving and retirement amount to keep with established percentages. Establishing a larger emergency savings account would also be a near-term priority.
I’d probably train for a marathon, because I’ve told my running group for a year now that my marathon training is contingent on doubling my income.
THEN: I’d set up a savings account to facilitate more fun travel and the undesirable but likely need to eventually purchase my next new-to-me car.
It’s a wonderful fantasy!
I have a nice cushion in investments for retirement and such already, but spend every penny I earn (and sometimes more) on day-to-day expenses. And, I should say, while we live a comfortable middle class life, we do not live extravagantly by any means (case in point: we have a single 13 inch TV from 1998).
So if my salary suddenly doubled: I would never teach summer school again (yay), I would do more in terms of outsourcing cleaning and such, and we would move to a larger house (another bedroom would be good, as I’m currently using my own as a home office as well).
@gwinne – definitely a more fun fantasy than pondering how one would cope in the reverse situation (as N&M points out in her comment). I think the idea of buying time — by not teaching summer school in your case — has a lot going for it. Since time is the ultimate non-renewable resource, being able to exchange money for time is a definite benefit to having more money.
Our income will be (I hope) more than doubling in about 5-10 years when I finally finish my training. How will that change things for my family?
1) I hope to be able to afford a non-closet to live in, in an area of the country I wish to live in, that has good schools, so that we don’t have to send the offspring to private school.
2) I will be able to save for retirement. Finally.
3) We will be able to fly to Italy to visit my husband’s family without handwringing about whether we can afford it for 6 months.
4) I will feel more confident asking my husband to relocate for my job because I will be able to support the family on my salary alone relatively easily.
@oldmdgirl – it almost feels like we’re getting away with something to be able to send the kids to public school! After seeing some of my NYC friends go through such hoops, I am enjoying the neighborhood school concept.
Both my husband and I work in fields we love and are well suited for. His is much better paying than mine. Once we had kids and the time vs money trade-offs became more crucial, it took several years for him to realize that his success is NOT independent of my career. I work from home and have the flexibility to cover the kids’ sick days and wait for repair people, so he doesn’t have to. He can plan his work travel without having to coordinate with a spouse’s travel.
Likewise, my success is due in part to his career. If I had to cover all bills and pay for individual health insurance instead of being on his plan, I’d have less flexibility to take chances on certain projects or to invest in myself, such as by taking classes. Also, at first he viewed childcare costs as having to come out of my earnings (since the alternative would be me staying home). Now he has come to view it as more of a household expense.
All of this is to say that it has taken a while to get to the point of seeing one spouse’s career earnings as NOT independent of what the other one does on the home front.
It’s still a work in progress, though. If my income doubled, it would still be less than half of his. Are we talking about a one-time doubling or the start of a trajectory? If it’s a one-time doubling, the added money would be a drop in the bucket, and little would change. If it’s the start of a trajectory, then I could see using more of the money to invest in my career and continue the trajectory (similar to your desire to structure longer writing periods). I think it would give my career a bit more respect in the household. (I think you have less of that issue than I do, since you have published books to your name and are viewed as an expert in your area.)
If HIS income doubled, then I think (like you) we wouldn’t make many changes. However, he did receive a promotion and raise recently, and since we don’t really need the extra money, I encouraged him to spend more on things such as flight upgrades that would improve his health and our quality of life (so he’d be less tired after getting home from business travel). I am also going to push to increase our charitable contributions this coming year. I might not have done these things a few years ago, but now I am more likely to speak from the viewpoint of considering “his” earnings to be _our_ earnings.
Eight years ago I went back to work. Our income didn’t double but it did go up. I put the max into retirement and used the rest to put our kids through college. Now the last tuition payment is due this month. (Whoo Hoo!) I think we won’t so much different with the increase in take home pay. We already live on less than DH makes and he worries about being laid off in his 50s. Probably save more and maybe travel a bit more.
At this stage in my life, I pretty much have a one-track mind regarding money: save, save, save, with the goal of being able to change my work life drastically in about three years. I think if my income suddenly doubled, I would sock it all away. *Maybe* I’d loosen up a little on how much we spend on travel–I’ve been jonesing to get back to London lately. But I’m already pretty happy with what we spend on our everyday expenses, and I’m punting major donations to charity, fancier investments, etc. a few more years down the road, when I think I’ll have the capital to really do them right.
pay taxes?
a larger or related question might be – what do we as a society or as individuals feel is a good value or use of money/success or upward mobility and given there is nothing inherently wrong with study, hard work and upward mobility how can we support things in our individuals and our society that we are all OK with… shouldn’t child care be a tax write off for working parents or say especially for single mothers ? above AGI line ? what about a tax credit for hiring single mothers ? maybe instead of charging americans certain amount of taxes there could be tax incentives for americans of certain income levels to say start a foundation like system where some of their money is deferred into say purchasing a rent to own home or running something that would be an investment for them and against say inequality in the society… what is the motivation to work in a graduated tax system ? and what does our current system do to women in the workforce or couples with children who earn over a certain amount and how could we better capitalize on their intellectual capital as a society … for example saving for a child’s education is tax liability and 529 savings are not tax deductible … and college is probably way too expensive in our society anyway … so what is it that is a good use of one’s talent
and disp income… there might be some larger questions here as to how to connect and reward folks within the society
Well, I’m currently experiencing the opposite where our household income has been halved with my layoff. Over the course of my 10 year job, my salary did double but we never really lived with that money. It just meant more savings (out of sight, out of mind). So now as I’m on the job hunt, its much less stressful and I can concentrate on finding the right job.
This effectively will be what happens to us when I return to my teaching job next fall, minus childcare costs. I’m actually really grateful for this time of living on one main income, with a small supplement from teaching private lessons. It’s taught us to budget and make do after years of spending on things that weren’t really needed and not paying down our debts as much as we could. When I go back to work, we might give ourselves a little monthly “raise,” but most of the extra income will go to paying off our car loan and paying up on our mortgage. I also want to beef up our retirement funds and my son’s college fund. It’s nice to look forward to such a big jump in income- it makes it a little easier to go back to working outside the home.
@Leanne- it is probably an equally good exercise to think about the opposite of my blog question: what would you do if your income was cut in half? As part of this theoretical, I might be willing to give people the ability to get out of fixed expenses (e.g. we will assume you could sell your house). Of course, this is not nearly as fun a game to play!
If my income doubled, I would hire extra people and outsource even bigger piece of my life. This way my income can keep growing, while I actually have the time to enjoy it.