How to Create a $1,000 Dollar Starter Emergency Fund in 1 month!

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Did you know that 56% percent of Americans can’t cover a $1,000 emergency expense with their savings? Wow. A sad but real statistic from this article here on CNBC.

But honestly I’m not surprised. I know too many people that just don’t really care about their finances and live paycheck to paycheck every month. Most of them are financed up to their eyeballs in debt and use credit cards to continually supplement their “lack of income,” or so they think.

And they’re not the only ones. You probably know some of those people. Maybe those people are you. Whatever your situation may be, it’s never too late to fix it. And it starts with setting up a $1,000 dollar starter emergency fund so that you can get your debt paid off.

So today, it’s time to get to work. In this post, you’re going to learn what a starter emergency fund is and isn’t, how much you need in yours, where to put it, and how to create it just 1 month.

Are you ready? Alright let’s go!

What is a starter emergency fund?

A starter emergency fund, or starter “rainy day fund,” is a small $1,000 dollar collection of money that is meant to cover emergencies while you are working to get out of consumer debt. This is not a fully-funded emergency fund, just something to offset emergencies that might come up during the short period of time you’ll be sacrificing to pay off all of your debt.

This is the only type of emergency fund that you should have while you have consumer debt. you should NOT have a fully-funded emergency fund at this stage.

Why? Because while you’re in debt, you need to have a small amount of money, exactly $1,000 dollars, to cover small emergencies and everything else going to your debt. That’s the fastest way to get out of debt completely and build wealth.

If YOU ARE OUT of debt, you’ll need to start building up a fully-funded 3-6 month emergency fund with all of your debt-free income and extra money. If that’s you, congratulations! You can check out my post on, “How to Create an Epic Emergency Fund With Any Income,” here on the site!

So if you have some debt, it’s time to get a $1,000 dollar starter emergency fund set up and ready to protect while you go through your debt free journey. Let’s look at what a starter emergency fund REALLY is and what it’s not in the next section.

The starter emergency fund: what it REALLY is and what it’s not

✅A Starter Emergency Fund is a Tool

I’d like you to think of your starter emergency fund as a tool to help you through life’s little emergencies. You know, a tire blows out, your A/C unit needs a fix, a simple emergency room visit, or your unexpected toothache that becomes an $800 dollar dental bill. It’s tough to fix those problems with no money.

✅A Starter Emergency Fund is a little bit of help

Yes, I know that $1,000 dollars isn’t a lot of money. And it’s not going to cover everything that comes up as an emergency. But you have to have at least something in place to cover you while you’re paying off debt.

Most people are going to disagree with this advice but that’s okay. While my family was paying off debt, $1,000 dollars to cover small emergencies was perfectly adequate. The great part about an emergency fund is that it provides you with peace of mind on top of that $1,000 dollars. Because most of the time, you can pay for smaller emergencies with your income.

But can you have more than $1,000 dollars in your emergency fund while you pay off debt? No. Trust the plan. If you happen to have an emergency that costs more than $1,000 dollars, you stop paying debt and you use the emergency fund, your normal income, and whatever other money you can make or find to cover you. Easy peasy.

✅A Starter Emergency Fund is a Buffer

Have you ever heard of Murphy’s Law? Well, According to Wikipedia.com’s article here on Murphy’s Law, it’s an old adage or epigraph that basically states, “anything that can go wrong, will go wrong.”

When you spend everything you make and you don’t have any money for emergencies, Murphy tends to visit a lot. I remember those days very clearly. We used watch our finances some, but mostly just lived without a plan and without trying to hit any financial goals. We also had debt. And Murphy would hit us over and over again.

But when we started working a plan to get out of debt, and we had emergency money in place, we saw that Murphy didn’t come around as much. And even if he did, we were ready to handle it.

Your $1,000 dollar starter emergency fund is a buffer for when Murphy comes knocking.

🚫A Starter Emergency Fund is NOT a Christmas Fund

Christmas is NOT an emergency. It happens on the same date every single year. Yep, December 25th at 12am marks Christmas Day. So that means you can’t use your emergency fund money to pay for gifts.

Nope, because if you don’t have enough money for Christmas this year, that’s your fault. You should’ve planned better. You need to set money aside every month for Christmas so that you can have the money ready for buying whatever present you’re going to buy.

🚫A Starter Emergency Fund is NOT pizza money or bar money

Your emergency fund is for EMERGENCIES. It shouldn’t be used for ordering pizza or going to the bar when you’re running a little short on cash before payday. It’s time to grow up and tell yourself, “NO!” And fashion emergencies don’t count, either.

Be smart. The money in your emergency fund is there to protect you from life.

🚫A Starter Emergency Fund is NOT an investment account

When you set up your starter emergency fund, we’re not putting it into any investment accounts because this fund is not an investment account. Your starter emergency fund is a collection of money, something I sometimes call “emergency insurance,” that just sits and waits to protect you. We aren’t trying to earn money off of this account and interest rate/rate of return in your bank doesn’t matter.

How Much Money Do You Need in Your Starter Emergency Fund?

While you are paying off debt, you need to have a set amount of $1,000 dollars in your starter emergency fund for unexpected emergency expenses. Anything more than $1,000 dollars should be allocated to debt.

Remember what I said in the first sentence of this post: The majority of people (and families) have little to no money saved for a rainy day. That’s bad. What happens when an emergency hits? Well, you can’t pay it in cash, so you do what everybody else does – you take out a loan or you pay with a credit card. That’s more debt and more mess. Most people don’t realize that a simple $1,000 dollar emergency fund can stop the damage of most emergencies.

Your starter Emergency Fund should have at least $1,000 dollars in it. That’s easy to fund and very useful in most emergencies. You will be super glad you had the initial $1,000 if an emergency strikes. You will eventually increase this number to a fully funded 3-6 month emergency fund after you pay off your debt, but until then, go ahead and get started with $1,000 dollars.

How to create a $1,000 dollar starter emergency fund in 1 month!

Alright, so let’s dig in and get started. Hopefully you’ve got a little bit of money in savings. That would definitely help. But if you don’t have anything, that’s okay. Commit to changing that right now.

So there are hundreds of ways to create your fund (or should I say hundreds of ways to make money to fund your $1,000 dollar starter emergency fund). But how you decide to create your fund is completely up to you! This is where you can get as creative as you like. This is where I suggest to you one word: INTENSITY.

Whether you decide to work extra, sell stuff, open a business, or scavenge the streets for cash, do so as fast and as intensely as possible. This is going to be the foundation of your financial plan, so you have to start things off with a bang!

You only need a thousand dollars. So let’s get this done in 1 month!!

Here are 7 ways to create your starter emergency fund in only 1 month!

1. Budget

when you start paying off debt and getting serious about your financial future, the first thing you need to do to start managing your money a little better is to create a budget. Just using a budget to manage your money can already make you feel like you got a raise. A budget is extremely important for helping you watch every dollar so that you can use anything extra to first fund your emergency fund and then pay off your debt.

If you need some help with learning how to budget, or just fine-tuning your budget, here are two posts that can be of help:

7 Ways a Zero-Based Budget is the Best Budget for Your Money (And How to Create One!)

37 Ways to Give Yourself a Raise in Your Budget (#27 is Crazy!)

2. Sell EVERYTHING

You should be in “crazy sell off everything” mode right now. You’re in debt and in serious need of a $1,000 starter fund. This means you should be so intense about selling things off that your kids and your pets are hiding from you (because they think they’re next!).

In all seriousness, the most immediate way to build your emergency fund is to sell everything that you aren’t using and everything you don’t really need. It might also be time to get rid of all that useless junk you have sitting around your house/garage/spare rooms/storage unit/etc.

Let’s be honest – these days, everybody has so much stuff that you might be able to sell a lot and make a couple thousand dollars (for the starter emergency fund and some of your debt). I specifically know of at least 3 people that I’m friends with that probably have $4,000-5,000 dollars worth of stuff that they’ve bought that could get them started easily. But they live a “keep-up-with-the-joneses” kind of lifestyle so all of that stuff will just get used and eventually get tossed.

If you’re having trouble figuring out what you need to sell, you can check out savinglifestyle.com’s post here on some good ideas of what you can sell to build your emergency fund.

Sell that stuff today and get your emergency fund ready for when you need it!

3. Work overtime hours

This can be easy for a lot of folks, because most workplaces want their employees to stay and work harder and longer. Whenever I work my full time job in law enforcement, a great way for me to get extra money to fuel my blog is through working overtime. I regularly put in about 10-20 hours of overtime per month. That extra money is great and can go towards whatever I want. My blog, my investments, an emergency expense, time off, or just whatever. Use OT and build your emergency fund up quick.

4. Get a part time job

For those that can’t get overtime and just don’t have stuff to sell, pick up a part-time job. Uber and Dominos both allow you to make around $10-15 dollars per hour. If you could make a few hundred bucks from it this month, you could easily complete your emergency fund and then continue making that extra money every month while paying off debt!

5. Start a small side business or side hustle

Get your entrepreneur on and start yourself up a small side-business or side hustle. There lots of ways to make money this way including old school labor-type jobs like cutting grass and cleaning pools for $30 bucks an hour. You just need to find something that fits you. I’ve done lawn care for a long time and can easily make $30-40 dollars an hour.

6. Start a blog, internet business, or YouTube channel

if you are motivated, patient, and ready to put in the work, starting an online business could be right up your alley. But it is NOT easy and passive income really isn’t that passive. It took me 4 years of grinding and hustling to build my other site, DiscgolfNOW.com, from the ground up to making $3,000-4,000 per month. It’s not that difficult, it just takes A LOT of work.

YouTube is another great option. I haven’t pulled the trigger on YouTube. But it has potential if you’re willing to dedicate yourself to putting in the work.

Whatever you decide to do in online business, don’t expect it to be easy and don’t think you’re going to be an overnight success. It’s tough. But the payoff can be tremendous.

7. Use your talents on Fiverr and create stuff and/or sell services to people

if you’re service oriented and you can do things like make business logos, write articles, review papers, design book covers, or almost anything business related, you could make a lot of extra money working for Fiverr. Give it a shot!

More ways to make money online

Aside from the last couple of things, there are hundreds of other ways to make money online. I tried numerous different ways and have finally found a few.

If I were you, I would continue to scavenge the internet looking for more ways to make money to build up your starter emergency fund. You can also check out Oberlo’s post here called, “How to Make Money Online: 28 Real Ways to Earn Money Online.” That should help.

So Where Should You Put Your Emergency Fund Money?

That’s the $1,000 dollar question. Seriously, that’s the question that’s going to help you stash your $1,000 starter emergency fund. But this is an easy one.

You should put the money you’ve collected for your starter emergency fund in a standard bank savings account at whatever bank you’ve chosen to do business with. You should NEVER invest this emergency fund into any high-risk investments and it needs to be available for use within a couple of hours if the need arises. This money should also be in a separate savings account from any other savings accounts that you are currently using to save up money.

Again, this starter emergency fund money should never be invested because you need to be able to get to it fairly quickly (within an hour or two). We don’t care about making any money off of this money because it’s meant to protect you from emergencies, not to help you build your savings or net worth.

If it’s in an investment account, and your account loses money due to the market, you might not want to actually use it if an emergency happens. A lot of people do this and end up putting their emergencies on a credit card or taking out a loan. Don’t do that!

Lastly, your money should NOT be held in cash because that’s too easy to get ahold of and used. People who are not disciplined need just a little bit of friction between them and their money so it’s not used for non-emergencies. A savings account is perfect.

Your money should be held in a regular savings account. Not an investment account, not in cash, and not in your checking account.

Here are a couple of places that you can use for your emergency fund:

Savings account connected to your checking
Money market account
High-yield savings account

Here’s a great video, from the folks over at Ramsey Solutions, that kind of explains why these are great places to keep your emergency fund.

So now you’ve got your starter emergency fund – what’s next?

So you’ve got your $1,000 dollar starter emergency fund in place. GREAT JOB! But what’s next?

Well, as I’ve alluded to already in this post, it’s time pay off all of your consumer debt! It’s time to get on the ball and start crushing the debt that’s crushing you. Get it gone as fast as you possibly can. And it all starts with getting the starter emergency fund done as fast as possible. Then you can work the plan, pay your debt off, and finally be free.

If you’re looking for our plan on how to get out of debt and build wealth, checkout the following post:

How to Stop Borrowing Money: 10 Step Guide to a Debt Free Life

Finally

The emergency fund is SO important. I’m glad that you’ve started the process of getting your finances together. Now, you’ve got to get your starter emergency fund completed ASAP so that you can start getting everything in your life paid off. Once you can do all that, you will have complete financial freedom. That’s what my family is working towards. I hope that you can, too!