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Financial emergencies can be scarier than The Demogorgon from Stranger Things. When you’re living paycheck to paycheck is difficult and can make you terrified of unexpected expenses.   

It could be new brake pads, a cavity, or any other financial emergencies that can make you contemplate how you can rob a bank and get away with it. 

The common advice is to save money for emergencies. However, in this economy, saving money seems like a luxury. According to the consumer price index, prices are 26% higher than before the pandemic. Higher prices translate into using every cent of your paycheck to make ends meet, which can cause stress, anxiety, and overall eat away at your mental health.

You might think that if something happens, you’ll find the money, you’ll figure it out. However, your nervous system is pleading for you to stop living in a constant state of fight or flight. To do your mental health a favor, it’s vital to be financially prepared by having an emergency savings account. 

Money isn’t evil, but it’s the root cause of your stress

Financial stress can take a toll on your mental health. While everyone may occasionally experience money-related stress from time to time, your perception of the situation can make all the difference. 

If your phone slips from your pocket and hits the concrete, shattering your screen, you’d probably start panicking. Your heart would start thumping out of your chest. This moment of panic can last for a few moments or hours and days, depending on your financial circumstances. If you had $10,000 in your savings, you’d probably mourn the loss for a moment, buy a new phone, and continue with your life. 

However, if you only have $100 saved, you’d most likely panic, start praying to whatever God you believe in, and hope your rich aunt will take pity on you and gift you $500.

According to Jeffrey Anvari-Clark, a professor of social work at the University of North Dakota, people who view financial setbacks as something difficult to recover from can trigger health problems such as substance abuse, high blood pressure, heart problems, and depression. 

So, how do you stop waking up in the middle of the night, wondering how you’re going to pay for groceries and repair your bathroom toilet that keeps on overflowing? The simple answer is emergency savings. Let’s talk about how you can realistically build that savings on a tight budget. 

Realistically building your emergency savings

Building your savings will take time, willpower, and the ability to say no to buying shiny new things. However, once you have solid emergency savings, you can go back to enjoying the finer things in life, without worrying how you’re going to pay for something you need.

Assess your financial situation

Before you start saving money, it’s important to know how much you’re making and how much you’re spending. Take a look at your recent pay stubs. Understand how much on average you’re making, and how much is being taken out for taxes.

Next, assess how much you’re spending on your basic needs. This is everything you need to pay for, like rent, gas, food, insurance, etc, to survive. Add up your total for your mandatory expenses and subtract it from your average income. Whatever is left over is what you’ll divide between your savings and spending on things that are nice to have but not necessary. 

When reviewing your finances, it’s important to be honest with yourself. If you notice you’re overspending in some areas, take the opportunity to create new spending habits. 

Have a goal

Depending on how much you have left over when you pay your bills, you want to create a savings goal. The key here is to start small. Setting a goal for $100, $300, or even $1000 will help you get started. 

Once you get into a routine of saving, you can start to increase that goal number. 

Create a system for saving

Once you have your goal, you want to create a system that helps you prioritize savings. This can look like

• Automating your savings so that a certain amount gets deposited from each paycheck
• Prioritize savings, don’t fall into the trap of saving money at the end of the month, save right when you get paid. 
• Have more than one savings account. You can have one account where you put money you’re not using at the moment. The other is strictly for your emergency savings. When you put money into this account, you are not to spend it, unless you meet your goal or there is an emergency. 

Creating friction between you and your emergency money

Make sure you’re emergency savings account isn’t connected to your checking account or debit card. You want to make sure wherever you keep your money, whether in a bank or a lock box, that it’s not something you can easily dip into.

Extra money just for savings

Any extra money you get, whether a tax refund, birthday money, bonus from your job, put that money towards your savings. 

Ask for help

It’s okay to ask for help from a financial advisor or a financial coach. They may be able to provide you with the tools you need to make financial improvements. You can also work with a professional to receive compassion for your particular situation. 

Remember that building your emergency savings and creating financial wellness isn’t just about having more money. Taking care of your finances is a form of self-care. It’s a way to take care of yourself now and in the future. 

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