In Case of Emergency: Preparing for the Unexpected

In Case of Emergency: Preparing for the Unexpected

“Hope for the best, but plan for the worst.” We’ve all heard this expression before, but how many of us follow it? While it’s natural to feel anxious planning for the worst, in the case of your finances, an emergency fund can significantly reduce your anxiety during an unexpected event. With an emergency fund, planning for the worst can potentially keep a short-term personal crisis from turning into long-term financial turmoil.

What Constitutes an Emergency Fund?

Regardless of your financial situation, an emergency fund should be part of your plan. A good starting point is keeping 3-6 months’ living expenses and discretionary spending in a liquid account. Some people choose to add more or less, but this range provides proper liquidity to cover many short term issues. Exactly how much cash should be in the fund is relative to your income stream, spending needs, and job security. An individual with a commission-based job may choose to have a higher cash balance than someone with a relatively stable job that is salary oriented. Additionally, there are several other factors to consider, including your risk tolerance, number of dependents, amount of non-discretionary spending, and whether your household has one or two sources of income.

Where Should my Emergency Fund be Held?

Determining where to keep your emergency fund is also a matter of personal preference, but I believe holding it in a bank or money market mutual fund is the best option. Below is a listing of the most common bank accounts and alternatives with their respective pros and cons.

Checking Account

  • Pros: Easy access through checks, ATMs, and online banking. These accounts are also built for frequent withdrawals
  • Cons: May not earn interest and may incur a monthly fee

Savings Account (i.e. Bank Money Market Account)

  • Pros: Earns interest and there are generally no fees
  • Cons: There are monthly withdrawal limits and a minimum balance may be required

Money Market Mutual Fund

  • Pros: Typically pays a higher dividend
  • Cons: May take 24 hours to liquidate and are not FDIC-insured

When Should I Use my Emergency Fund?

It is important to remember that an emergency fund has its name for a reason: it is for emergencies only. Unexpected medical expenses, job loss, or urgent home or car repairs are some of the most common reasons people need to access their emergency fund. You should not use it for anything that is not truly an emergency – no matter how tempting a new kitchen or European vacation might be.

I recently purchased my first home and am learning firsthand how critical it is to have an emergency fund. While home maintenance is a never-ending saga, it is only a matter of time before an unexpected and expensive repair pops up. If my furnace breaks when it’s 20 degrees below zero, my emergency fund will have the cash I need to get this vital repair done.

If you need help setting up an emergency fund or have any questions about your specific situation, please do not hesitate to reach out to us.

This article contains general information that is not suitable for everyone. The information contained herein should not be constructed as personalized investment advice. Reading or utilizing this information does not create an advisory relationship. An advisory relationship can be established only after the following two events have been completed (1) our thorough review with you of all the relevant facts pertaining to a potential engagement; and (2) the execution of a Client Advisory Agreement. There is no guarantee that the views and opinions expressed in this article will come to pass.

Strategic Wealth Partners (‘SWP’) is an SEC registered investment advisor with its principal place of business in the State of Illinois. The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (http://www.adviserinfo.sec.gov).

For additional information about SWP, including fees and services, send for our disclosure brochure as set forth on Form ADV from SWP using the contact information herein. Please read the disclosure brochure carefully before you invest or send money (http://www.stratwealth.com/legal).

Investments
Is It Still A Good Time For You To Invest?
People often ask me, “is now the right time to get into the market?” If I had a crystal ball that told me when to buy and when to sell, I probably would not be writing this piece! With the highest inflation numbers since the 1980s, concerns about an economy potentially in recession, and the most prolonged downturn in stocks since the Great Financial Crisis, there is no question that investors have been challenged this year. The good news is that there are always opportunities for long-term investors with the right plan. Whether you are an experienced investor, have recently come into cash, or are new to the financial markets, below I discuss some things to consider when asking if now is the right time to invest.
Read More
Investments
Retiring in a Volatile Market
This week has been another extremely turbulent one in the stock market. While it is never comforting to see large, red numbers, volatility can be even more uncomfortable for recent retirees or those considering retirement. A colleague of mine recently told me that he has seen more of his clients retire in the last two years than in his first ten years of working at SWP. This got me thinking a lot about the notion of retirement. Retirement is a huge life event and adding volatile markets can compound the feeling of uncertainty. In this article, I will share some of the concepts we have been discussing with our clients.
Read More
News
Strategic Wealth Partners Ranked In Milwaukee Business Journal’s Investment Management Firms List
Strategic Wealth Partners is proud to be listed in the Milwaukee Business Journal’s Investment Management Firms ranking. The list is ranked by firm assets under management from December 31, 2021. “We are so pleased to be included in this list of the largest investment advisors in the Milwaukee area. We first entered the Milwaukee market in 2018 because we saw tremendous potential to combine forces with some outstanding professionals,” says Principal and Co-Founder Neal Price. “Kathy Klein, Joe Thompson, and the entire Milwaukee team are best-in-class. We are excited to expand our presence and become the go-to firm for comprehensive wealth management services in the Milwaukee area.” “Our success comes from a solid and loyal client base who believes in our personalized solutions. Our work on behalf of our clients is far-reaching, but it all comes down to our unique process that is client focused, manages complexity, delivers simplicity, and guides our clients to their goals,” states Wealth Advisor Kathy Klein. Strategic Wealth Partners is an independently managed wealth management firm that has been partnering with clients since 2008 in Deerfield, IL, and since 2018 in Milwaukee, WI. For more information on services, please visit www.stratwealth.com.
Read More