ChooseFI Logo

$1000 Emergency Fund: Why You Need One and How to Build It Fast

Experiencing an emergency that you’re not prepared for is the quickest way to have your finances go haywire. That means knowing how to build an emergency fund is one of the first things you should do when you’re working to get control of your finances.

Emergencies can incur debt that may take years to repay or can even cause financial ruin. Emergency funds are designed to offer you a good degree of financial protection from the unknown. When you’re starting to get control of your money and get yourself on a good financial track, one of the first things you should know is how to build an emergency fund.

But if you’re living paycheck to paycheck, how can you even think about saving money for a rainy day? And the suggested beginning goal of $1000? That seems totally out of reach.

Trust us when we say that it’s not. 

How do you build an emergency fund? You start little by little. Don’t be daunted by the amount, but focus on the goal of being prepared. By decreasing your nonessential spending and selling some unneeded items around your house, it’s very likely that over the next 30 days you’ll find $1,000 already available to you. Bank that, and your emergency fund is established. Saving $1,000 in the bank for emergencies is the key to getting out of the paycheck to paycheck cycle.


Amortization Calculator

Use our free Amortization Calculator to see your interest payments and payoff value for an amortized loan.  Enter your starting principal, interest rate, the start

Read More »


Why You Need An Emergency Fund

As you think about getting control of your money and getting out of debt, the idea of building an emergency fund that you may or may not need might be frustrating. Why not use that money to help you in your current situation instead?

There are three reasons why you can’t afford to think like that anymore.

Crisis Happens

A crisis can have a lot of different names: job loss, unexpected bills, unforeseen car or home repairs, a medical emergency.

No matter what form it takes, a crisis will happen to you at some point. It will also require a lot of money from you when it happens. A crisis doesn’t care whether you have the funds to pay for it or not.

If you’re like most American families, you’re already living paycheck to paycheck. A crisis might push you over the cliff into financial ruin.

The Alternative To An Emergency Fund Is Debt

If you don’t have the funds to pay for an emergency outright, you only have a few options–and they all end in debt.

  • Payday Loans. A payday loan is when you borrow money from your next paycheck to cover an expense that’s due immediately. The loan is usually due upon receipt of your next paycheck.
    The problem is that lenders often charge outrageous interest in the neighborhood of 38%, according to a recent Pew study on payday loans. So if you borrow $500 and have a 38% interest rate, that means you have to pay back $690.
  • Credit Cards. Again, the interest is what will really cost you here. Credit card interest rates are all over the place and vary widely from person to person and card to card.
    If you can’t pay off that credit card right away (and you likely can’t or you would have had the money to cover the emergency), then you might be paying for months or years to pay off your credit card. That includes both the amount you charged and the interest that accrues.
  • Borrow Money From Friends Or Family.  It’s true that there likely won’t be interest if you borrow money this way. However, you could be putting a relationship at risk if you can’t pay the money back in a time acceptable to the person who lent it.

Derailed Financial Stability

Gaining control of your finances after you’ve spent years ignoring them is a challenge. You’re likely working really hard to gain every little bit of financial stability you now have.

An emergency can wreck your precarious financial stability and set you back months or years. It also may discourage you to the point where you’re derailed permanently from your goal of financial freedom.

Once you’ve come to terms with needing to build an emergency fund, the question becomes, how much should you have in that fund?

Why $1,000 Is Enough At First

Most experts recommend that you keep an emergency fund that will cover at least six months’ worth of expenses. However, that’s a really daunting prospect, especially if you’re someone who has never learned to save.

We recommend an initial goal of $1,000 in your emergency fund.

First of all, that’s an achievable amount. It’s not too huge that it seems impossible to reach.

Secondly, $1,000 is often enough to cover smaller emergencies. Even if it’s not, it’s usually enough to mitigate the damage to your financial situation. In other words, you’ll only have to charge or borrow a small portion rather than the whole amount.

Finally, if your goal is to build an emergency fund of $1,000 in one month, that’s actually a small enough amount that it’s entirely possible that it could be hiding right in your budget. With some small changes to your budget and some intentional efforts, you could find yourself with an extra $1,000 in the bank before the next 30 days are up.

Ways To Save $1,000 This Month

Before you look to see how much extra money you can earn, check your spending habits to see how much money you can save.

Go through your budget and identify non-essential spending. Then challenge yourself to eliminate it.  

Here are seven quick and easy swaps that can make a huge difference in the amount of money you save each month.

Eliminate Paid Streaming Services – Use Your Local Library Instead

Many streaming services like Hulu allow you to put your subscriptions on hold. This prevents you from having to pay, but won’t delete your preferences and streaming history. 

While that’s on hold, check your local library for entertainment. Getting a library card, which allows you to check out resources, is free and usually just requires a valid driver’s license.

If you haven’t been in a while you might be surprised at what you find there. Sure books are still available, but you can check them out in both digital or hard copy. Movies and music are also available. Many offer classes or lectures on popular and informative topics.

Search through this database of libraries to find your local one if you’re unsure where it is. 

Related: 10 Things You Can Get For Free At Your Library

Eliminate Eating Out – Cook For Yourself Instead

Eating out is an expense that can add up quickly.  Take the temptation away by preparing ahead.

If you normally go out for lunch, pack one the night before instead. Then you can’t use the excuse that you were running late and didn’t have time to pack your lunch. 

If you go out for dinner, meal plan for the week ahead and grocery shop so you know you have all your supplies. You can even prepare meals on the weekends so they’re super easy to pop in the oven after a long day of work.

Eliminate Cable – Try Free Streaming Options Instead

We know–we just told you to put your streaming services on hold in favor of the library. However, if the choice is between cable and streaming, the latter is most often your cheaper choice by far.

YouTubeTV, for example, offers many of the same channels as cable and costs $64.99/month. By contrast, the average cable bill is now $217.42/month, according to this recent study of household finances.

Granted, internet is a part of that cable cost, but you can get the internet in your home for an average of $50/month. Following our math, that’s $114.99 with YouTubeTV and internet vs. $217.42 for cable. That’s a huge savings of $102.43/month.

Eliminate The Coffee Shop Trips – Make It At Home Instead

Amerisleep recently polled just over 1,000 coffee drinkers about their java habits. People aged 25-34 spend an average of $2,008 per year just on coffee. That’s about $167/month.

Dust off your Mr. Coffee and buy some grounds at your local store, and you’ll watch your savings rack up.

Eliminate Driving To Work – Explore Other Methods Instead

Transportation can be costly. One of the easiest ways to save money on it is to give your car a break and find alternate ways of getting where you need to go. 

First, ask your boss if you can try working from home. There is no shorter or cheaper commute than the one from your bed to your home office.

If your boss wants you in the office and your commute to work isn’t very far, consider riding a bike to work when weather permits. Bikes are free to ride and park and also typically less expensive to maintain than a vehicle. 

If your commute is too long to bike, consider public transportation. Many local bus systems offer discounts to riders who buy multi-fare bus passes upfront or those who qualify for common discounts, like those awarded to veterans. 

Maybe you live somewhere with limited or no public transportation. Ask your co-workers to start a carpool. They’re a great way to save money and possibly make some new friends. 

Related: Longest Lasting Cars On The Road Today

Eliminate Excess Energy Spending–Revise Your Habits Instead

The key here is evaluating your patterns and seeing where you can make adjustments.


Your electricity bill is one of the easiest bills to lower because it is very dependent on how you use it.  

Some appliances, like your refrigerator, will need to consistently draw electricity. Other appliances do not need to be plugged in when not in use. Even when your appliances are turned off, it is likely that they are still drawing power. Keep your electronic devices on a power strip to easily unplug several unused ones at once. Excess electricity drawn from your appliances makes up an average of 20% of all residential electricity use

Related: How To Lower Your Electric Bill


Use a programmable thermostat for easy savings. These thermostats allow you to align your home’s heating schedule with the way you live. A programmable thermostat will automatically turn down the heat when you leave for work and turn it up before you come home.

If you’re leaving your heat at the same temperature all day, you might be surprised at the saving you incur with this simple switch.

Eliminate Your Bad Habits–Live Cleaner Instead

We all have a bad habit we’d like to kick, like smoking, over-snacking, or drinking. 

Bad habits are not just bad for your health, but can also be bad for your savings. ChooseFI contributor Mr. 3000 found that he could save $500,000 over his lifetime just by cutting off his drinking. Check out his story here

Ways To Earn $1,000 This Month

If changes to your non-essential spending don’t allow you to build an emergency fund of $1,000 in 30 days, you might be able to make up the difference by earning some money.

Sell Your Stuff

If you haven’t used a selling app before, check out our guide to the best-selling apps for getting rid of your stuff. These apps, which include Facebook Marketplace and Craigslist, can connect you with people in your neighborhood, or even across the country.

Some apps will even buy your things directly from you. This means meeting up in parking lots or at your home could be a thing of the past. 

Decluttr is one of those apps. It’s a great way to sell your used electronics. You can use their app to look up your items to get an instant price. If you agree to sell your items for that price, you can mail your tech to them for free with their provided shipping labels. They will pay you the day after the items are received.

Check out Decluttr’s FAQs here and see if it’s right for you.

Cashback Apps

Cashback apps make it easy to receive cash back on purchases that you plan to buy anyway. Apps like Rakuten, formerly Ebates, can get you up to 40% cash back at over 2,500 different stores

Rakuten is a shopping portal that directs you to some of your favorite stores and then collects the cashback for you. They then pay you quarterly with a check in the mail or a deposit into your PayPal account. 

Get started earning cashback on your online shopping here.

Short-Term Side Hustles

Side hustles are a good way to make some extra cash. They don’t have to be long-term. Short-term side hustles can make it possible for you to earn an additional couple hundred dollars towards your goal of $1,000. 

Manual Labor In Your Community

Ask your neighbors if they need help keeping up their lawn or shoveling themselves out in the winter. Working those jobs could earn you some decent money. Do a a good job and the word-of-mouth reviews might earn you a lot of clients.

Virtual Assistant

If manual labor doesn’t sound like your sort of hustle, maybe try becoming a virtual assistant. If someone you know just can’t seem to get ahead, offer your services and help them organize their life online. You might yourself a whole new career!

Grocery Shopper

Stores are in great need of additional shoppers to fulfill online orders. You can often set your own hours so it’s easy to pick this up as a second job.

If one of these three doesn’t fit your skills, check out our full article on short-term side hustles.

Final Thoughts

If you are planning to build an emergency fund of $1,000 in 30 days, it’s going to take more than just one of these hacks to get you there. But you can easily see that combining several of them can get you very close to that amount.

It’s doable and necessary. People who have a good handle on their money say that after tracking your money, saving $1,000 in an emergency fund is the second most important thing you can do to gain control over your finances. It sets you up for long-term financial success.

Start today and see how much you can bank in the next 30 days.

Subscribe To The FI Weekly

Action, accountability, inspiration, and community. Join the movement. Get started on your Path to FI