When I was in graduate school, I was given the book Don’t Sweat the Small Stuff, probably because I had a habit of freaking out over every little thing.   I love this book.  What it is trying to teach is that maybe the fact that your car needs new brakes is not the human tragedy you perceive. The whole point is to try to gain perspective on the adversity in your life. I like to define “small” as any problem where you can throw a reasonable amount of money at it, and it goes away. One snag with this theory, you have to have that reasonable amount of money at your disposal. This is what I mean by money as a misery-prevention device. I understand the theory that money doesn’t buy happiness, but it can certainly solve small problems, which is a good way to get on the road to joy.

Aside. I never understood the expression Mo Money, Mo Problems. My life has definitely been Mo Money, Less Problems or Less Money, Mo Problems. If too much money is the source of your problems, it’s not being used correctly.

Unfortunately, many people get fooled into buying things as a way to happiness (and usually end up disappointed that the thing did not lead to instant euphoria), instead of building their wealth, and as a result end up doing a lot of sweating (and swearing) over some pretty small stuff. Without that financial protection, the new dishwasher, car repair, or other “small” problem becomes huge. Frequently this simply leads to more credit card debt, which only makes future small problems worse!  See the study here.  A little dated, but still valid, over half Americans can’t handle a $500 expense without going into debt.  Having that boulder hanging over your head places enormous stress on you and is a great way of turning small problems into big problems.  And, the unexpected will definitely happen (probably should be called the expected)!  It’s not if something will break, it’s when.

Think about happiness, true happiness in your life.  Is it buying the latest gadget, or first eliminating this burden? This is the main reason why that emergency fund is so essential to your well-being.  Remember, the purpose of money is a time enhancer. It’s fine to buy the occasional toy that catches your eye, but don’t be fooled that this will make you happier than financial security. From my personal experience, I can tell you it is extremely liberating to get up every day knowing that any small problem can be handled. For the big $ “small” problems, there’s insurance and for the other small problems, there’s a sufficient pile of money, sitting around and ready when I need it. I like my mountain bike. I like my kayak. I like my truck. But I love worrying less.  That peace of mind in itself is an incredibly valuable purchase.