2025 Newsletter — Volume 2

How to save for the unexpected¹

We’ve all felt that dreaded feeling before — when the car unexpectedly dies or you discover a leak in the house that needs to be fixed immediately. Any expense that you’re not prepared for is always a challenge. It’s money you didn’t intend to spend and perhaps don’t even have to spend. This is why saving money for those surprise expenses in an emergency fund is important.

Saving for the unexpected is essential because you will be ready for the disruptive events life may throw at you. An emergency fund can make your life a little less stressful when unannounced changes occur, as you can use the money you have saved up specifically for that reason.

There are many ways to save for an emergency fund, but a great way is to write the emergency fund contribution amount into your monthly budget as if it were another bill or expense. By making it a part of your monthly budget, you’re acknowledging how important it is to have money saved for the unpredictable.

8 key financial figures to know²

When it comes to overall financial health, there are several steps you may take to create a realistic and actionable plan to help sustain or improve your financial well-being. The first step typically involves knowing where you stand financially, followed closely by defining your specific financial goals.

Knowing the following eight financial numbers is essential to providing the groundwork for understanding and improving your financial wellness.

1. Credit score
2. Monthly expenses
3. Monthly income
4. Cash flow
5. Debt balance
6. Net worth
7. Savings rate
8. Retirement contributions

Each of these financial numbers plays a critical role. Some may seem less meaningful than others, but they are all essential in knowing where you stand financially. You can then use that understanding to help define and work toward your financial goals.

Consequences of withdrawing early from your 401(k)³

A 401(k) account can be a valuable savings vehicle to prepare for retirement. However, one of the common concerns with saving in a 401(k) is that your funds are not easily accessible. And that is by design — remember, your 401(k) savings are there to provide you income in retirement.

There are a few ways to access your funds before retirement, from hardship withdrawals to 401(k) loans. Before doing so, it is essential to consider the different impacts of withdrawing from your 401(k) early:

• A 401(k) loan must be paid back, or the balance may be taxable.
• Income tax owed on the withdrawal or defaulted loan amounts.
• A 10% early withdrawal penalty may also apply.
• What you take out is no longer invested and working for you.
• You may need to compensate for a withdrawal by increasing your future contributions or delaying your retirement age.

Your 401(k) is a valuable savings vehicle, designed to provide for you in retirement. It is important to understand the consequences of taking money from your 401(k) early for short-term needs.

Learn more about these impacts before withdrawing funds from your 401(k).