How to Structure Financial Responsibilities If You Are The Sole Earner?

2025-06-25

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Being the sole earner, family is your biggest responsibility. Every decision you make, whether managing daily expenses, paying life insurance premiums, or planning for uncertainties, impacts your loved ones. Thus, without a structural plan, it is easy to fall into the cycle of living paycheck and there is no room left for saving investments or protection against unforeseen circumstances. In this blog, we will discuss certain points that help you to safeguard your family's future.

Key Takeaways

Savings alone are not enough, as strategic investments drive long-term financial security and growth.

An emergency fund ensures financial stability during unforeseen circumstances.

To manage debt effectively, keep a debt-to-income ratio below 40%.

A term insurance plan is vital to securing your family’s financial future in your absence.

Informing a trusted individual about your financial assets ensures responsible management if needed.

Set Clear Financial Goals

The most important part of your financial planning is to set clear financial goals. It is better to understand the financial requirements of your family and plan accordingly. You can consider the famous and legit method i.e. S.M.A.R.T goals. For example-

Specific: Purchase a 3BHK apartment in a prime location.

Measurable: Save ₹30 lakhs for the down payment in five years.

Achievable: Set aside ₹50,000 monthly in a high-yield savings account.

Relevant: Owning a home provides long-term security and stability for the family.

Time Bound: Buy the house in the time frame of 2 years.

Begin securing your future

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How to Build a Strong Investment Portfolio?

It is difficult to fulfil every financial requirement with only a savings option. You need to invest your money in different avenues to fulfil your family's short-term and long-term financial goals.

Maintain your investment portfolio on the basis of your risk tolerance and investment horizon. With proper asset allocation and diversification into different investments, plans can generate optimal risk-adjusted returns.

Don't forget to review your investments periodically. Eliminate the unworthy investment schemes that weaken your portfolio performance.

Investing In a Term Insurance Plan

A term insurance plan is one of the best life insurance policies to protect your family’s financial future. In the event of any mishappenings, it ensures that your loved ones receive a death benefit to cover their living expenses, debts, and financial obligations. This plan is more beneficial for the individual who owes the debts or other financial obligations.

For example, iSelect Smart 360 Term by Canara HSBC Life Insurance offers comprehensive coverage. It includes three plan options: life cover till 99 years, steady income benefit, and blocking your premium.

Create an Emergency Fund

As the sole earner of the family, this fund will assist you and your family members through uncertainties without borrowing any loans or debts. You must keep aside a certain amount for an emergency fund. Ideally, it is sufficient to cover expenses for 6-12 months, with monthly expenses including EMIS.

How To Build an Emergency Fund?

Building an emergency is not an overnight journey. You have to keep aside a particular amount every month in a different bank account. For example, Your goal is to create an emergency fund of ₹60,000. In case you have to keep a set aside of ₹5000 every month to accumulate the money you need.

Did You Know?

Mortgage lenders generally seek a debt-income ratio of 36%.

Source: Investopedia

Understand Debt Management

Being the sole earner in your household doesn’t automatically mean taking on debt is a bad decision. However, it's crucial to manage it properly. The first step is to carefully analyze your income and ensure your debt-to-income ratio stays below 40%. This means that no more than 40% of your income should be allocated to repaying debts.

Using your credit cards wisely is a simple way to avoid falling into a debt trap. It’s recommended to limit the number of cards you own, ideally one or two, and reserve them for emergencies only. By doing so, you can maintain control over your spending and prevent unnecessary debt from accumulating.

Inform a Trusted Member of Your Finances

Managing your finances ensures long-term financial security. It’s important to avoid poor investment decisions that could negatively impact your financial well-being. However, have you considered who will handle your finances in your absence?

If you are the primary or sole breadwinner of your family, you must inform a trusted family member about your financial assets, such as savings, investments, and liabilities. In case of an emergency, this person can make informed financial decisions to safeguard your family’s future.

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iSelect Smart360 Term Plan

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Conclusion

A sole earner can secure their family’s future through careful financial planning. By setting clear goals, making wise investments, and maintaining an emergency fund, you can ensure long-term financial stability. It's also important to share your financial plans with a trusted family member so they can make informed decisions and manage your finances effectively if needed.

Glossary

Debt-To-Income Ratio- It is a financial metric that compares how much you owe each month to how much you earn.
Emergency Fund- It is an unutilised cash which is used in financial setbacks.
Term Insurance- A life insurance policy that provides coverage for a specific period, ensuring financial security for dependents.
Debt Management- It is a process of repaying debts without taking a loan.
Life Insurance Premium- Amount of money you pay to an insurance company to keep your life insurance policy active.

FAQs

DTI Ratio = (Total Monthly Debt Payments / Gross Monthly Income) × 100

You can reduce your life insurance by determining how much insurance you need, choosing a policy length, early buying and comparing insurance quotes.

6 to 12 months of expenses to the emergency fund is sufficient.

There are three ways to pay off the debt:

Debt Snowball Method- This method focuses on the smallest debts first, then moves to larger ones.
Debt Avalanche Method- This method focuses on debts with the highest interest rates first.
Debt Consolidation- This method focuses on combining multiple debts into a single loan with lower interest.

No, it is not because it hurts the credit score and has less chance of success.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.