The Power of a Dual Income Couple

Albert Einstein said that compound interest is the 8th wonder of the world.  He who understands it will earn it, and he who doesn’t will pay it.  If compound interest is the 8th wonder of the world, then I feel that the power of a dual income couple is the 9th.  Being in a dual income couple can be a powerful wealth building partnership if managed correctly.

At my first full-time job, I worked with a guy named John.  John trained me when I first started at the company.  He and I became friends and we would often have conversations during lunch hour.

John was more than 20 years older than me.  He and I would talk and he would give me advice about life.  He told me that his wife was a stenographer and they lived off her salary.  They used her salary to pay their mortgage, car payments, buy groceries, and all their other expenses.  He said that they saved all the money he earned from his position.  They invested all his earnings and were planning on retiring in 20 years when they were both age 60.

I was a young man at the time and never heard of living off one salary.  This was just around the time that I was getting interested in personal finance.  It truly did sound like an ingenious plan.

When my wife and I got married, this was the basic strategy that we planned on using.  In my own experience, I have found that being in a two-income household has many financial advantages.  Here are some tips on structuring a plan to get the most out of a dual income household:


Start by analyzing both salaries and identify the higher of the two.  Use the higher of the two salaries for paying all the reoccurring monthly expenses including housing, food, insurance, recreation, miscellaneous expenses, and child care if you have children.  Set a goal of one day being able to use the lower of the two salaries to pay these expenses.  This can be done by focusing on reducing expenses, career growth, and even side jobs.

You might be thinking that living on one salary would be impossible.  It might not be easy, but it is defiantly doable.  Check out the Story about Liz who was featured on  Liz provides for a family of five people while also saving to reach early retirement (FIRE).  Liz is also the author of the blog


Before you start saving and investing, you want to analyze your debt.  If you are part of a dual income couple that has a debt, first work on paying that down.  If need be, take a few years of using the lesser of the two salaries to pay down your debt.  Start by paying off all credit cards, auto loans, and any personal loans that you might have.

Next, pay down your student loans and mortgage.  Once you are left with only student loans and a mortgage, pay them down to a debt-to-income ratio (DTI) of under 15%.  After your debt-to-income level (DTI) is at a manageable level of under 15%, the higher of the two earners can work towards reducing the (DTI) even further.

To calculate your Debt-to-Income Ratio, see the formula below:

Debt-to-Income Ratio = Monthly Debt Payments/Monthly Income x 100

Example: $1000 in Monthly Debt Payments/$4000 in Monthly Income x 100 = DTI of 25%


When you are in the paying down debt stage, you should also contribute to a 401K if there is an employer match.  You want to contribute to get the max amount of what your employer is matching.  To do otherwise would be to refuse compensation.

Now it is time to start saving and investing.  First, establish an emergency fund of 3-6 months of expenses in an FDIC insured savings account.  Second, max out both 401K accounts to take advantage of tax-deferred savings.  Third, max out both Roth IRA accounts to grow that portion of your savings in a tax-free account.  Forth, use any additional savings to invest in broad market ETFs in a taxable account.


No matter if you are newly married or have been in a dual income couple for many years, you too can take advantage of the powerful wealth building capabilities that you have been blessed with.  My wife and I have been following this approach to reach financial independence for almost ten years.  Our savings rate is over 50% because we have learned to live on one salary.

One last note, I ran into my old co-worker John last summer after not seeing him in many years.  I was having breakfast at a local diner one Saturday morning and John was there with his wife.  We had a brief conversation.  He told me that he is retiring next year and moving from Pennsylvania to Texas where his wife has a family.  It appears that he truly did follow the simple yet profound approach to reach financial independence that he introduced to me a long time ago.

Please remember to check with a financial professional before you ever buy an investment and to read my Disclaimer Page.

10 thoughts on “The Power of a Dual Income Couple

  1. Save Splurge Deny Debt - Cameron

    It is awesome how quickly things can add up when you can live like this. My wife and I started this a few months ago to bolster savings and pay down our debt quicker. Now we are using a lot of her income to invest and save.

    We are also planning on her dropping to part time work. With the savings in daycare, driving, and other work related costs, we will break even and still be saving plenty. Good tips in the article!

    1. thefinancialjourneyman Post author

      Thanks for the comment.

      That sounds like a great plan.

      I know that daycare can be crazy expensive.

      That is great that your wife can work part-time to spend more time with your child, reduce day care costs, and still have earnings to save.

  2. Laurie @thefrugalfarmer

    Great info here. We are utilizing a similar plan. Because I can work from home, there are minimal work expenses and I can still be there for the kids, home school, etc. It’s awesome having that power of extra income!

    1. thefinancialjourneyman Post author

      Hi Laurie,

      Thanks for the comment.

      That is great that you work from home. That saves both time and money. Plus, you get to stay home and educate your kids.

      Yes, extra income is always nice.

  3. Swaloven

    It’s really awesome post, i really appreciate you man, i get inspiration from this post
    but if i am single then what i do for dual income?
    i am waiting your good ans
    Thank you for sharing

    1. thefinancialjourneyman Post author

      Thanks for your comment.

      Well, it is more about two people living off of one salary.

      You could always get a second job.

      Get a part-time job or side gig to boost your savings beyond what you are saving from your full-time job.

      It is also a good strategy to be aware of when you do get into a long-term relationship.

  4. Mustard Seed Money

    My wife and I live off of one salary as well. It has definitely helped us stay discipline over the years and allowed us to really reach for FIRE. We are getting closer by the day and hope to achieve it before I turn 40 🙂


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