UBS Financial Services Inc. paid advertisement

When it comes to managing wealth, it makes sense sometimes to go back to basics. One idea includes putting a portion of it into a savings account strictly for emergencies to help protect it no matter what happens in the future.

Even if you already have enough money in your account to weather uncertainties, an emergency fund can still play an important role in wealth planning. For some, wealth may not always be immediately available. If something unexpected happens like having a sudden large expense or if you lose your job, having access to a designated rainy-day fund can help you relieve stress and avoid the hassle of trying to access illiquid funds or, worse, go into debt.

Let’s explore why emergency funds matter, and where you can fit one into a strong wealth management strategy.

What does an emergency fund look like?

An emergency fund is meant to help you navigate a sudden change in your financial life. It can also make dealing with an unexpected situation a little easier and provide valuable reassurance.

The right amount to have in an emergency fund varies depending on your circumstances. Some financial advisors recommend having 3 to 6 months of living expenses set aside, but the right amount for you depends on your situation. Consider your income sources and your spending needs, and plan accordingly.

Where to keep your emergency fund

Storing your money in an FDIC-insured, liquid, fee-free, interest-bearing account, such as a high-yield savings account, is likely your best move. These types of accounts may grow and also provide quick access to funds. Some savings accounts may limit ATM access, making it easier to not be tempted to make withdrawals from your emergency fund.

On the other hand, keeping your emergency savings in a long-term investment fund might make it too difficult to access the money, as it could take time to liquidate the fund. Furthermore, this strategy could cause you to miss out on potential market gains if you do remove it at the wrong time.

Some individuals opt to keep their emergency fund in cash, but putting your money in a bank account offers benefits, including the chance to earn interest. You can also still access your funds at a moment’s notice.

Strategies for building an emergency fund

If you currently have a lot in a savings account, you may consider moving the amount you want for an emergency fund into a designated, separate savings account and label it as such. Otherwise, you can do the following:

• Deposit a large sum, and jumpstart your savings by earning interest right away.
• Ask your employer to put a portion of each direct deposit into your new emergency account. Creating a new emergency fund helps keep your savings separate, makes them easier to track and can help you avoid spending on non-emergencies.
• Make your savings automatic by setting up recurring transfers from your checking account into the new savings account.
• Put at least half of any unexpected money you receive, like a gift or work bonus, directly into your emergency fund.

Remember, when building your emergency fund, saving consistently is the best strategy, and will help you to grow your savings faster.

The bottom line

No one can predict the future, but with an adequate emergency fund, you can be more confident that you’re ready for whatever comes next. It also helps to build a strong wealth framework based on three strategies: Liquidity. Longevity. Legacy. These can form the foundation of a wealth management approach, like the one called UBS Wealth Way. Look for well-defined strategies that can help you to have more confidence in your financial life.

It’s key to speak with a financial advisor and work together to create a plan that’s right for you, and that aligns with your highest ambitions and most important financial goals.

Sources:

consumerfinance.gov/an-essential-guide-to-building-an-emergency-fund/

UBS Wealth Way is an approach incorporating Liquidity. Longevity. Legacy. strategies that UBS Financial Services Inc. and our Financial Advisors can use to assist clients in exploring and pursuing their wealth management needs and goals over different time frames. This approach is not a promise or guarantee that wealth, or any financial results, can or will be achieved. All investments involve the risk of loss, including the risk of loss of the entire investment. Time frames may vary. Strategies are subject to individual client goals, objectives and suitability. 

This material is provided for informational and educational purposes only. It is not intended as investment advice or a recommendation that you take a particular course of action.

As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer.  Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information, please review the client relationship summary provided at ubs.com/relationshipsummary or ask your UBS Financial Advisor for a copy.  In providing financial planning services, we may act as a broker-dealer or investment adviser. When we act as investment adviser we charge a separate fee for the service and enter into a written agreement with you.  The nature and scope of the services are detailed in the documents and reports provided to you as part of the service.

© UBS 2025. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS Group AG. Member FINRA/SIPC