NEERA KUCKREJA SOHONI TACKLES A FEW MYTHS ABOUT THE SOLVENCY OF THE TWO-INCOME FAMILY

Romila joined as a junior
executive in a media company. A few years later, she got a fantastic raise when her company was acquired. From the pay hike and handsome bonus she got, she and her spouse decided to buy an apartment in the suburb of a metropolitan city. The credit came easily and mortgage was no problem until she found herself pregnant. The baby turned her priorities away from her job. They had not had time or inclination to save ahead for an eventuality of their two-income family being turned into one that relied on a single earner. Soon enough, the mortgage became an overbearing burden, and the bank eventually threatened a foreclosure The problem of an unexpected loss of income leading a two-income family to the verge of a .scal but, more importantly, an emotional collapse is everywhere.  In the heady cash rich and consumer driven world spawned by globalisation, young women and men are so busy collecting their pay checks and spending them on ‘perceived’ daily needs that they just do not care to undertake a reality check.

In her essay on the middle class running into hot water with mounting debt, Elizabeth Warren, warned some years ago that middle class families in America are falling behind their dream of affording or sustaining their lifestyles. One in seven families, she further predicted, would go bankrupt.

The typical person going bankrupt is an otherwise sober householder busy making babies who failed to suspect the impending .scal disaster.

Warren explained the paradox of how two-income families end up with a smaller safety net than single earner families. To fund the middle class dreams of decent housing, car, good schooling for children, vacation and a few other facets of contemporary lifestyle, both spouses must work. When one has to forgo income to raise the lone child or many children, the .ow of funds becomes uneven and insuf.cient.

To pre-empt bankruptcy, Warren suggests some household measures..  From the growing experience and perspective of many Indian yuppie couples,

common advice to emerge is: ‘To set yourself on the course to solvency, you do not need to start with the big-ticket items.’ Learn to seriously query and resist the temptations and seductions of daily living. The next Barista coffee you buy as your daily high or the next set of fancy drapes you pick up at the home fashion store may seem harmless at the time, but it is the beginning of a downward .financial spiral.
 Thoughts of new cars, homes and babies enter countless heads but not seriously enough to change people’s spending habits. But more and more, faced with downsizing and sudden layoffs, medical emergencies, ailing parents and new babies, and collapsed earnings, couples are realising that double income days do not necessarily last forever.

In other words, as Warren concludes, the modern two-earner couple is actually more vulnerable than the traditional single-breadwinner family.

The way to avert such a .scal crisis is to squirrel away one spouse’s salary and treat it as non-existent or out of bounds. That way, you land up with more money and fewer expenses than you should technically have found affordable or feasible and with no risk of burnout from .scal overload. A home, car or vacation bought on the presumption of two incomes is an open invitation to certain bankruptcy.