These smart, simple suggestions will help you keep calm about your finances―and stay above water.

By Lesley Alderman and Mia Taylor
Updated April 07, 2021
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If you could rewind your thoughts from a recent sleepless night, do they play back like this? Worry about money…wonder what you're making for the bake sale…worry about money…remember to wish your coworker a happy birthday…worry about money. In these challenging times, money worries are rarely far from many of our minds.

Making matters worse, most people have a "recency bias, which leads them to feel that the future will be no different from the recent past, which in this case was not so great," says Gary Belsky of the pandemic year; Belsky is coauthor of Why Smart People Make Big Money Mistakes and How to Correct Them ($31.60,

How do you stop that negative cycle of worry and feel hopeful again? (Without winning the Powerball, that is.) Start by discerning between irrational worries that you can set aside and valid concerns that warrant action. Below, you're bound to find at least one idea that shores up your pocketbook and eases your mind.

The worry: If I get laid off, there's no way I'll survive financially.

The fix: You've probably heard that you should have three to six months' worth of living expenses stashed away in an emergency fund―which, for most of us, is a daunting task. But here's what you may not know about that old chestnut: "This guideline does not mean enough money to live at your current standard," says Manisha Thakor, co-author of On My Own Two Feet ($10.65, "Those savings need to cover only the essentials―your mortgage or rent, car expenses, utility bills, food, medicine, health insurance, and debt payments."

Even better news: If you are eligible for unemployment after getting laid off, a three-month emergency fund should be enough. So once your savings are on track, relax. (We mean it.)

Nest egg not as large as it should be? Reducing your spending will calm your worries, says Richard Sacket, a New York City psychologist who specializes in stress management. Take a look at everything―yes, every single thing―you spend money on in a month, suggests Thakor. Then eliminate anything discretionary that doesn't bring you joy, like those pay channels you never watch. Your savings will add up, and you won't even miss what you got rid of.

The worry: My mortgage and credit card debt hang over my head 24/7.

The fix: Your mortgage payments should not be more than 33 percent of your gross income. So if your household income is $100,000 a year, your annual payments (including property taxes and homeowner's insurance) should be less than $33,000, or $2,750 a month. If you're in that ballpark with a fixed mortgage rate of 6 percent or less, stop worrying. If your payments ring in higher or you have a high interest rate, look into refinancing.

"It's harder to qualify, and the process takes longer than before, but for some, it's still a viable option," says Pam Krueger, cohost of MoneyTrack on public television. When it comes to credit card debt, if you're strapped with it (and you certainly may be―the average American carries about $6,600 in credit card debt), lower your stress by eliminating what you owe as quickly as possible. Each month, pay double, or even triple, the suggested minimum payment. If you don't have the cash, look into transferring your balance to a low-APR card.

You can compare cards at Even if you're charged a transfer fee and an annual fee, such cards could cost you less in the long run.

The worry: I hyperventilate when I look at my investment statements.

The fix: "Daily stock market or investment fluctuations shouldn't matter that much, since historically prices recover with time," says Jason Zweig, author of Your Money and Your Brain ($14.99,

Still, managing college funds, brokerage accounts, and 401(k)s can be overwhelming. Worried that you have made unwise decisions? Ask a fee-based certified financial planner to assess your holdings (find one at He or she will find the right investment mix for your age and risk profile. Owning low-cost index funds, like the Vanguard 500 Index (, is also a relatively safe choice.

A recent study by Eugene Fama, a professor of finance at the University of Chicago, and Kenneth French, a professor of finance at Dartmouth College, found that index funds have outperformed most actively managed mutual funds.

The worry: I agonize about losing my health insurance.

The fix: Granted, this is a tough one, so researching your options is the best plan. If you're healthy and young, you probably don't need to worry―you can probably find another affordable plan. It might not offer comprehensive coverage, but it will protect you in case of a catastrophic illness.

However, if you're over 50, or have a chronic condition like diabetes, it might be difficult to find a reasonably priced policy. To see what your options would be, check with your company's human resources department (if you are currently working) to find out how much the company contributes toward health insurance. (You would be responsible for that amount if you were laid off and retained your current coverage under COBRA, the federal law that allows you to maintain your health insurance for 18 months after leaving your job.)

If you work for a small business with 20 or fewer workers, log on to to see if your state has a "mini-COBRA" law that extends COBRA protections to you. Also, go to the insurance clearinghouse site to find out the general cost of a new policy. (Be sure to click on "Plan Details" for specifics; many of the cheaper plans have threadbare coverage.)

The worry: There's no way I have enough to retire on.

The fix: Accepted wisdom says you will need 80 to 85 percent of your annual preretirement income during your golden years. To get a rough idea of how much you should save each year until you retire, use one of the many retirement calculators now available online, including this one from CalcXML, which tells you if you're saving enough. 

You might be entitled to Social Security payments when you retire, which can reduce the amount you'll need to sock away now. (Estimate your monthly payout at

Plus, if you're eligible to receive a pension, you can count on that income, too. And you can also gain peace of mind knowing that expenses that stress you out now, like mortgage payments and college tuition, will probably be a thing of the past by then. So you truly can live on less.