Consistent with a life course and social contextual approach, this study proposes a reciprocal relationship between stressful life events and emotional distress during the transition from adolescence to early adulthood. Study predictions included continuity of events and distress, and reciprocal causation between events and distress. SEM analysis of longitudinal, prospective data from 526 white, rural targets largely supported study expectations. Stressful events and distress showed stability over time, and a degree of reciprocity between events and distress was observed. At each of three time points, stressful events predicted psychological distress, and psychological distress at mid- and late-adolescence predicted events at early adulthood. Possible direct and buffering effects of resource were also examined, including, financial, self-concept, and social support. Analysis of resource models revealed a direct and buffering influence of financial resources.