If you're a woman who's the main earner in your family, you're in good company. In about 16% of opposite-sex marriages, the wife was the sole or primary breadwinner as of 2022, according to the Pew Research Center. That's up from just 5% in 1972. And as the number of single adults in America rises, people of all genders are increasingly faced with bearing sole responsibility for all of the household finances.
Whether you're single or coupled, being the main source of income can also carry a lot of pressure. Here are six things to do to secure your financial future.
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1. Negotiate, negotiate, negotiate
When your paycheck is funding all your household needs, it's especially important that you negotiate to get the best deal possible out of your employer. Yes, salary is important, but it isn't the only thing to consider before you say yes to a job offer.
For example, negotiating to work remotely or on a hybrid schedule could save you substantially if you're commuting less or can live in a lower-cost area. If you're a working parent, you could also save money on childcare costs.
Also, be on the lookout for sneaky things, like noncompete clauses, often buried in employment agreements -- and think very carefully before you sign. These agreements can make moving on to a better job or negotiating for better wages tougher. The Federal Trade Commission, seeking a ban on most noncompetes, estimates these agreements cost workers nearly $300 billion worth of wages each year.
2. Get your full employer match
If your company has a retirement plan, like a 401(k), and matches employee contributions up to a certain percentage, make it a top priority to get the full match. Not only will you get free money, but it's also a set-it-and-forget-it way to build a nest egg. Employer retirement accounts are typically funded through payroll deductions, so it's pretty effortless once you enroll and choose your investments.
3. Build a three-month emergency fund
Building an emergency fund is probably the most daunting of all the to-dos on this list. But when you're the breadwinner, it's especially important because an unexpected job loss or illness could leave you unable to pay your bills. If you work in a job that is neither physically taxing nor vulnerable to economic downturns, a three-month emergency fund may suffice. Otherwise, aim for six months as a long-term goal.
Unless you're extremely frugal, an emergency fund will probably take you at least a year or two to build. Try thinking of it as a 13-week or 26-week savings goal and tackling it one week at a time. If you have high-interest debt (which we'll get to in a moment), aim to build four to eight weeks' worth of savings. Then you can focus on slashing your debt. From there, prioritize building your emergency fund further. Once you have a solid emergency fund, you can start saving for retirement beyond your employer match.
4. Knock out high-interest debt
If you have debt with interest rates above 6% to 8% -- like credit cards or, in some cases, private student loans -- aim to pay that off once you have a bare-bones emergency fund. Group your debts in order from the highest interest rate to the lowest interest rate. Make the minimum payments for each, but put your excess money toward paying off the highest-interest debt. Once you pay off each balance, apply the money you were paying toward that debt toward the balance with the next-highest interest rate.
5. Maintain adequate insurance
One catastrophe can wipe out a lifetime of good financial decisions if you're not properly insured. So when you're the breadwinner, it's essential to make sure you have sufficient coverage for all types of insurance: health, homeowner's or renter's insurance, auto, disability, and life.
If your family is relatively healthy and has decent savings, a health savings account (HSA) may make sense since you can roll over the balance from one year to the next. But if anyone has major health problems or you couldn't afford a big medical bill, you may want to select a preferred provider organization (PPO) instead, depending on your coverage options.
Life insurance is also a must if you have dependents. For the vast majority of people, term life insurance is the best choice because it's far more affordable than a permanent policy. One very basic rule of thumb is to buy coverage for 10 times your salary, but that's overly simplistic, especially if you have children whom you want to put through college or you have a mortgage. Consider discussing your specific needs with a financial advisor.
6. Save for college in a 529 plan
Finally, if you have children, you may want to invest in a 529 plan so that you have money set aside when it's time for college. You won't get a tax break on 529 plan contributions, but withdrawals for qualifying education expenses are tax-free. They also have a minimal effect on financial aid eligibility.
You should only take this step if you've checked off the first five steps on this list. But once you're in a solid financial position, investing extra money to help your child graduate with minimal debt is a wise way to use any hard-earned extra cash.
