Why Having an Emergency Fund Is as Good for My Mental Health as My Financial Health

I write about financial matters all the time, so you'd think I'd be equipped with enough knowledge to not have to worry about money incessantly. But in reality, a lot of people worry about money.

Heck, even millionaires have been known to stress about not having enough money to meet their goals. And so I'm not ashamed to admit that I've done my fair share of stressing over financial matters, such as not having enough savings for retirement or worrying about how to pay for my kids' college.

Another thing I tend to worry about big time is unplanned expenses. I own a home and two vehicles, and that alone subjects me to a host of unknown costs.

Plus, I have kids. And kids tend to fall and get hurt and get sick. When that happens, the medical bills can be enormous.

That's why I make a point to maintain a pretty large emergency fund. In fact, I try to keep enough cash in my savings account to cover a year's worth of living expenses, even though that's the high end of what financial experts tend to recommend.

But having a solid emergency fund isn't just good for my financial health. It's also really important to my mental health.

When I don't have to sweat random bills

Nobody likes to see an unplanned expense land in their lap. But these days, the idea of one is so much less stressful because I've made a point to build up a solid level of cash reserves.

To be clear, I'd still panic if I were to find myself staring at a $20,000 home repair. But I'll be honest and say that the idea of a $500 repair here or a $600 repair there doesn't worry me so much. It's not that I want to have to spend my money to fix my home. But I'm at least less generally worried about it.

Many people, however, aren't in that boat. A recent SecureSave survey found that 67% of Americans don't have enough savings to cope with a $400 unplanned expense.

But because I maintain a large emergency fund, the idea of having to shell out $400 out of the blue really isn't so worrisome. And so it's worth it to me to keep that cash in the bank for the mental health benefits involved.

Set yourself up to worry less

Building emergency savings may not be the easiest thing to do. But it's worth making some sacrifices to get there, like I did.

Through the years, I've driven older cars, lived in smaller homes, and given up certain luxuries, like nicer vacations, to pump money into my savings. You may need to do the same to build up enough cash reserves to protect yourself from emergency expenses. But what you lose in the form of a nicer car or more meals out, you might gain in the form of better sleep -- as in, not lying awake at night worrying about money.