Here's 1 move experts agree is essential for navigating financial uncertainty

Rising gas prices and marketplace volatility driven by the war with Iran are fueling financial uncertainty. Add to that the daily barrage of headlines warning that an AI-bot is about to take your job, and it’s understandable if you’re feeling uncertain about the state of your finances.

Regardless of whether your worst fears come true or not, it’s prudent to financially plan for the unexpected, and now is always the best time to do so.

CNBC Select covers how to prepare for financial uncertainty, and the one step experts agree matters most: building an emergency fund.

Expert advice for navigating financial uncertainty

Build an emergency fund

Avoid costly financial moves

Protect yourself with insurance

Building an emergency fund is often the first step in preparing for financial uncertainties.

“An emergency fund is a super, super basic thing that you should really prioritize before you even think about saving funds for investments or buying a house,” Rachael Burns, CFP and founder of True Worth Financial Planning, told CNBC Select.

While other experts recommend setting aside three to six months of living expenses in your emergency fund, Burns believes how much you should save depends on your situation. If you have a stable government job, you may need to save less than someone who is self-employed or who works seasonal jobs.

If you’re looking for a place to store your emergency funds, both Burns and Michael McAuliffe, president of Family Credit Management, recommend high-yield savings accounts (HYSA). This type of savings account provides easy access to your capital and a higher return than traditional checking and savings accounts.

Look for an account with an APY of 3% or more and no monthly maintenance fees, like the UFB Portfolio Savings, SoFiÂŽ Checking and Savings or Western Alliance Bank High-Yield Savings Account.

UFB Portfolio Savings

UFB Portfolio Savings offered by Axos BankÂŽ, a Member FDIC.

3.26% APY

$0, no minimum deposit or balance needed for savings

No monthly maintenance or service fees

Overdraft fees may be charged, according to the terms; overdraft protection available

Terms apply.

Read our UFB Portfolio Savings review.

Strong APY on savings balances

No minimum deposit or balance required for savings

No monthly fees

Free ATM card with unlimited withdrawals

Free transfers between direct deposit accounts

Online and SMS banking available

Mobile check deposits

Security features include fraud and anti-virus protection, SSL encryption for connection, automatic logouts after inactivity

Potential overdraft fee, though overdraft protection is offered

Certain types of withdrawals and transfers may be limited

$10 excessive transaction fee per transaction over 6/month

No physical branch locations

SoFi Checking and Savings

SoFi Bank, N.A. is a Member FDIC.

Earn up to 3.30% APY*

Sign-up bonus of $50 or $400

No account, service or maintenance fees for SoFi Checking and Savings.

Overdraft Coverage is a feature automatically offered to SoFi Checking and Savings account holders who receive at least $1,000 or more in Eligible Direct Deposits within a rolling 31 calendar day period on a recurring basis.

*Click here for significant disclaimers and disclosures.

Impressive welcome bonus

Strong APY with direct deposit

No minimum balance or deposit needed

Comes with checking account and ATM access

Receive your paycheck in your account up to 2 days early automatically when you set up direct deposit

Save change automatically with Roundups and set savings goals with Vaults

No foreign transaction fees

FDIC insurance up to $3 million additional through the SoFi Insured Deposit Program*

Non-direct deposit APYs are low compared to other high-yield savings accounts

No reimbursement for out-of-network ATM fees

No physical branches This also touches on aspects of bear market.

McAuliffe recommends opening a HYSA for your emergency fund at a different bank than the one where you have your everyday checking account.

“That helps you with impulse purchases,” commented McAuliffe. “We don’t want you to be able to get on your app [and] transfer the finances immediately, because it’s too tempting. We’re too impulsive, we’re too emotional. We justify things.”

Adding the friction of an interbank transfer can help you keep your emergency fund reserved for emergencies.

Planning ahead for financial setbacks reduces the likelihood that you’ll be forced into making a suboptimal decision.

You’ll want to avoid actions like raiding your retirement account or taking out a loan against your retirement savings. Early withdrawals from retirement accounts can be subject to taxes and penalties, so this option shouldn’t be taken lightly.

“It’s just an incredibly inefficient way to meet a financial need,” Burns remarked.

While you may be able to borrow against your 401(k) balance (depending on your plan), this isn’t an ideal reaction to, for example, an anticipated job deficit.

“When things are rough, taking on a 401(k) loan… has a lot more consequences than citizens think,” McAuliffe mentioned.

If you lose your job, you will need to repay the loan, or it could be considered a distribution and subject to taxes and a penalty. The exact repayment period varies, so if you’re in this situation, call your plan administrator for more information.

Even if there are no negative changes in your financial situation, saving today and protecting yourself from the worst-case scenarios will put you in a better position down the road.

On top of an emergency fund, you can protect yourself with the right insurance.

Rather than agonizing over every possible scenario, Burns prefers to think about how likely an event is and determine if you’re in a situation to withstand it.

“Then we address each of those risks as best we can,” she commented.

Events like severe illness or injury, death of the household’s primary income earner and damage or theft of your property can all be covered by insurance.

If you own a home and have a mortgage, you’re typically required to have homeowners insurance, which protects your property. Further, renters can protect their belongings with renters insurance. Many companies offer discounts for bundling insurance policies, including Progressive, which offers renters insurance in all 50 states.

Progressive Renters Insurance

Availability

Progressive renters insurance is available in all 50 states and Washington, D.C.

Coverage limits

Personal property: $100,000, personal liability: $500,000, medical payments: $5,000, shortfall of use: $20,000

Deductible

$250 to $2,500

Add-ons

Personal injury, water and sewer backup

Available nationwide

Discounts for bundling, gated communities, going paperless and more

May not cover certain dog breeds

Some policies underwritten by third party

If you have life insurance or disability insurance through your employer, you may lose these coverages if you leave your job, are laid off or fired. As such, it can create sense to have policies not tied to your employment.

As you’re shopping for coverage, consider Ladder for life insurance and Assurity for disability. Both offer no-medical-exam policies, meaning you can qualify without a physical exam, and are featured on our lists of the best life insurance and disability insurance.

Ladder Life Insurance

Policies

Term life

Policy highlights

Digital-first life Ladder offers no-exam term life insurance with up to $3 million in coverage. Policyholders can adjust coverage and premiums for free as needs change.

Policies are available in all 50 U.S. states to applicants between 20 and 60 years old.

Online quote for term policy

Yes

No-exam term life with coverage up to $3 million

Online application process

Can adjust premiums and coverage for free as needs change

No riders

No permanent life insurance

Enrollment age limit is 60 years old

Assurity Disability Insurance

Cost

The best way to estimate your costs is to request a quote

App available

No

Assurity’s disability insurance offers many built-in benefits, including a waiver of premium and coverage for home modifications in the event of a total disability, and things like occupational rehabilitation to help you get back to work. Assurity also offers a variety of riders that can help you fit your policy to your needs.

10 riders available to customize your policy

Medical exams and income verification not required for benefit amounts up to $6,000 for qualifying applicants between ages 18 to 55.

Quotes not available online

Financial challenges are largely unavoidable, but by taking slow, steady steps to build an emergency fund and put the right protections in place, you can boost your odds of navigating them successfully.

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Meet our experts

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. Furthermore, experts in wall street note the continued relevance.

For this story, we interviewed Michael McAuliffe, founder and president of Chicago-based Family Credit Management and Rachael Burns, a financial planner and founder of True Worth Financial Planning.

Michael started Family Credit Management in 1996 after working in banking and credit counseling. He received a bachelor’s in business management from Concordia University Chicago and a master of science from Abilene Christian University.

Rachael Burns is a certified financial planner and certified divorce financial analyst.

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can build informed decisions with their capital. Every personal finance story is based on rigorous reporting by our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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AI Disclosure: This article has been generated and curated using advanced AI technology. While we strive for absolute accuracy, some details may be summarized or translated by autonomous systems. Please cross-reference critical financial data with official sources.