$1,000 Starter Emergency Fund
Goal: Save $1,000 as fast as you possibly can
Step 1: Get started by saving $1,000 as an Emergency Fund
According to Bankrate’s Annual Emergency Fund Report, 57% of Americans could not cover a $1,000 emergency in cash, without going further into debt.
Let’s change that!
The car broke down, the water heater went out, you had an unexpected visit to Urgent Care, your dog Walter took an unexpected trip to the Vet… These are all unplanned. They can be considered emergencies. These situations have the ability to create a bad day and potentially cause you to fall further into debt.
An emergency fund gives you a little cushion for these emergency situations. It is there to keep you from going further into debt when emergencies occur.
A few things that are NOT emergencies:
Christmas (It occurs every year on December 25th. Plan accordingly)
Amazon Prime Day
A new pair of Jordans
The newest phone
HOA payments
Insurance Payments
Let’s start by getting a foundation. An Emergency Fund is needed to keep you from going further into debt if an Emergency occurs. Step 1 is to save $1,000 as fast as you can, and place it in an Emergency Fund.
Keep your Emergency Fund separate from your checking account. You can save your Emergency Fund in a savings account. You can open a savings account at your local bank or credit union. (You can also open one at a reputable online bank). When opening a savings account, make sure the account is FDIC (Bank) or NCUA (Credit Union) Insured. When you have an account that is FDIC or NCUA insured, your money (Up to $250,000 per account) is safe/insured if the bank fails.
Do NOT link your Emergency Fund to your checking account as overdraft protection.
How to fund your Emergency Fund?
If you have $1,000 saved already, great! Place it in the Emergency Fund.
If you do not have $1,000, let’s get started. Using the budget you created. Cut as many expenses as you can, and make minimum payments on all of your debts. Any left over money use to fund your Emergency Fund.
At this point, we are not concerned with interest rates on our Savings Account. The goal is to just get started and build momentum.
10 ways to save $1,000
Here are 10 ways to expedite funding your Emergency Fund.
Make minimum payments on your debt. Any extra money you find in your budget, add it to your Emergency Fund.
Have a Garage Sale
Sell things on Facebook Marketplace, Craigslist, eBay. (Remember to be safe)
Get a side hustle
Work Overtime (if hourly)
Get a part time weekend job
Cancel subscriptions
Stop dining out
Shop your home/renters/automobile insurance with an Independent Insurance Broker (Do NOT cancel your existing insurance until you have new insurance in place)
Have a $0 Spend Month
FAQs
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An emergency fund is cash set aside that will help cover the cost of an Emergency without putting you further into debt.
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Open a savings account at a bank or a credit union. Important: make sure that the bank is FDIC insured/credit union is NCUA insured.
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We don’t need to do anything fancy for our Starter Emergency Fund. We want to open a Savings account or a High Yield Savings account.
We aren’t as concerned with the interest rate at this point, as much as we are concerned about saving $1,000.
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Here are 6 ways to start saving.
Make minimum payments on all of your debts, and use any money leftover in your budget to fund your Emergency Fund.
Have a garage sale.
Sell things on Facebook Marketplace/Craigslist. (Remember to be safe when doing this)
Cancel subscriptions.
Get a side hustle.
Have a No Spend Month - Don’t spend money on anything except the necessities for a month. Use the money you saved to fund your emergency fund.
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An emergency is bound to happen. If you need to cover an emergency expense, use money from your Emergency Fund.
Then replenish your emergency fund to get it back to $1,000.