How To Get Rid Of Money Stress

Money Stress

If I told you I had a pill that would get rid of, or at least significantly reduce your money stress, would you take it?

Did you just yell “YES!” at your computer screen?

I have that pill.

Actually, it’s just two words.

Are you ready?

Emergency fund.

I know, it’s exhilarating and sexy and fun.  You’re welcome.

Get Rid Of Money Stress

According to H&R Block, 59% of Americans constantly worry about money to some degree.

Fifty-nine percent!  Worry constantly.

55% of newlyweds said finances put stress on their marriage.  Over half of newly married couples are freaking out about money.

That’s probably before kids, and probably before they’ve bought a house.  And they’re already freaking out.

Know what they should be doing at that point?

They should be so blissfully and outwardly falling over each other in love that it makes the people around them want to throw up in their mouth just a little bit.

If I told you I had a pill that you could take and stop worrying about money, I’d be prepared to be overrun with people clamoring to get it.

Bad news: there’s no magic pill.

Good news: having an emergency fund will achieve the same effect.


Stop Freaking Out About Money

Having an emergency fund helps you to stop worrying about money all the time.

Sure, there will be times when something goes sideways and it’s going to stress you out a bit.  That comes with the territory of being a responsible, productive member of society.

Bummer, I know.

Knowing you’re not one blown tire away from being plunged into (more) debt is an incredible relief.  If you’ve never experienced that before just trust me on this one.

Want some help with all of this?  Find out how money coaching will change your life.

What Is An Emergency Fund?

Very simply, an emergency fund is a stash of money you have squirreled away that you spend only, you guessed it, in case of an emergency.

I mean a real, true emergency.

Your emergency fund is for when something ridiculous happens that actually must be addressed right now and was not planned for in your budget.

Why Do I Need An Emergency Fund?

You know I love it when you ask great questions!

You need an emergency fund for the same reason you need insurance.

Whatever insurance you have, home, life, auto, health.  You don’t plan on finding yourself in a situation that requires you to make a claim on an insurance policy you have.  

No one plans on being in a car accident, having a tree fall on their house, or being diagnosed with a shitty, expensive, medical condition.

Consider your emergency fund as insurance for your finances.  It’s your protection against an unforeseen situation that can wreck your budget, your savings, your money.

Only it’s actually better than insurance because you keep all the money you save instead of paying premiums with it, and if you squirrel it away in the right place, it can actually make money for you.

Brilliant.  In a zero percent sarcastic way.

Remember the three little pigs?

The first pig built his house out of straw.  The Big Bad Wolf came along and blew it over with a huff and a puff.  That’s all it took.

The second pig did a little better with his sticks.  It took the wolf a few extra huffs and puffs but he still below it down.

The third pig crushed it.  He and his brick house said screw you wolf I’m not going anywhere.

Having a fully-funded emergency fund is being the third pig with his brick house.  It’s your better-than-insurance policy for your finances.

The third pig sat in his sturdy brick house eating bonbons laughing at the wolf because he knew he was just fine.  He wasn’t stressing out about his house or the wolf.

Bringing It Back

If you’re living paycheck to paycheck and you don’t have any kind of emergency fund, first let me say, you are definitely not alone my friend.

According to a 2020 study by First National Bank of Omaha, 49% of Americans expect to be living paycheck to paycheck in 2020.  53% of Americans don’t have an emergency fund.

Don’t beat yourself up about it.  You’re here and you’re learning and that’s step number one.


This study was published on Feb 18th, 2020.  Which means it was conducted long before coronavirus wreaked havoc on the economy.  This study is probably super optimistic about how the rest of this year is most likely going to shake out now.

But that’s not the focus of this article right now.

If you don’t have any kind of emergency fund at all, you’re like the first pig in the straw house.  As long as nothing changes, you’re just fine.  But when the wolf comes along, things get hairy quick.

Let’s say you’ve got $1000 saved for the wolf.  You’re pig number two in the house made of sticks.  It takes more than one little thing to cause problems.  The wolf has to huff and puff much harder to derail the system.

This is good news.  This buys you time and reduces stress considerably.

The wolf can still come and cause problems, though, even if you’ve delayed it a little bit.

Having a fully-funded emergency fund is like building a brick house

The wolf comes and tries to blow your house over, and you can stay safely inside ignoring him for the time being.  He’ll huff and puff and probably cause some damage to the exterior, but he’ll give up and go home.  

Then you can take your time fixing the minor damage he caused (replenishing your WTF Wolf?! fund) without the added stress of urgency and uncertainty.

(This three little pigs metaphor worked out even better than I thought it would if I do say so myself…)

The wolf, of course, is some crazy circumstance.

You lose your job.  Your car decides its time to go towards the light and leave you stranded.  Your AC goes out in the middle of the summer in the south.

Your emergency fund is your brick house.  You can’t cover whatever the unexpected expense is with your monthly budget/income.

This is where you use your emergency fund to pay for the emergency without having to run up a bunch of credit card debt at 20% interest, ultimately making a bad situation worse.

Since you know you’re going to be ok for a few months, you can now deal with the problem from a calm, levelheaded place with out the added stress of “how the heck am I going to put food on the table???”


Let’s start with some examples of an emergency:

  • your hot water heater broke in the middle of winter
  • your car died and you need it to get to your job, which you need to pay your bills
  • you have an actual medical emergency
  • the biggest one: you lost your job or had hours/income reduced

Now for some examples of what is NOT an emergency:

  • a really fantastic sale at your favorite store
  • Christmas
  • vacation
  • back to school necessities
  • car insurance due

Christmas, back to school, car insurance bills, routine doctor visits, you’ll notice all of these things have one thing in common: they happen routinely and you can plan for them ahead of time.

What’s that quote about poor planning?

Poor planning on your part does not constitute an emergency on mine.

Do you know who said that?  Your bank account.  Your bank account said that to you.

If you’re feeling like I’m being a little mean today, I’m sorry but really you’re welcome because we all need a little reality punch in the face sometimes.

I’m honored to be your big sister or best friend who tells you what you need to hear, not what you want to hear.

Hugs and kisses.

Ok, now that we’re all on the same page about what is and is not an emergency…

How Much Do I Need?

How much is a “fully-funded” emergency fund?

Ahhh the million-dollar question.  Such a question deserves only the very best answer.

That answer is, of course, it depends.  Don’t shoot me.

The rule of thumb for a fully-funded emergency fund is three to six months of living expenses.

Figure out what your monthly living expenses are and what your savings rate is, and you’ll know how much you need in your emergency fund and how long it’s going to take you to get there.

Things to consider:

  • will you lower non-essential spending in an emergency, reducing your expenses and therefore needing a smaller oh sh*t fund?
  • how many months of expenses do you want to have saved?  I recommend at least three months; you may prefer closer to six (or even more)
  • do you own rental properties or a vacation home you’ll need to continue to make mortgage payments on regardless of your income situation or their vacancy? 

Where Do I Keep The Money?

My recommendation, and where we keep our emergency fund and other savings ourselves is in a high-yield savings account.  

You can read all about high-yield savings accounts here, but the wave tops are:

  • earn a significantly higher interest rate than your normal savings account, grow your emergency fund faster (free money people!)
  • super easy to set up, most have no fees or minimums
  • non-volatile (you don’t risk losing it all in a market dip)
  • easily accessible, but not too easily (you can transfer the money to your checking account in 1-3 business days, but you can’t spend it on a whim or in a moment of weakness)

What If I Have Debt?

Should I build an emergency fund while I still have debt?  Yes.

I’m sorry, let me say that one more time, a bit louder.


Everyone needs an emergency fund, debt or no debt.

If you have debt to pay off and no emergency fund, I highly recommend the $1000 approach.

Save $1000.  That’s your emergency fund for now, and throw the rest of your money at your debt to get rid of it as fast as you can.

Having that $1000 isn’t going to fund your life if you lose your job tomorrow.  But it will save you from going into more debt if your refrigerator dies.

That little buffer upgrades your house from straw to sticks.  It gives you much more peace of mind and fends off the wolf a little longer.

When you have some wiggle room, even if it’s just a little bit, you can work on paying down your debt much faster with fewer setbacks.

Then all of the sudden, before you know it, you’re in the debt-free club and you won’t even know what to do with yourself!

Famous Last Words

Living in a brick house instead of a straw one can truly have a wonderful impact on the mental weight you’re carrying around.  

Join the stress-free money club.  It’ll change your life.

Feeling overwhelmed?  I’ve got you.

Ready to stop running around with your hair on fire?  Check out my free resources or schedule a free consult call to see what future you is up to.

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Written by Kayla

Stop Running Around With Your Hair On Fire


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