$1,000 Starter Emergency Fund Explained

Baby Step 1 $1,000 Starter Emergency Fund ExplainedAccording to gobankingrates.com, 45% of respondents said they have $0 in a savings account, and another 24% said they have less than $1,000 in savings as of December 2019. When some people start the Baby Steps to better their financial life, they think they need more than $1,000 in their Baby Step 1 $1,000 Starter Emergency Fund. Suddenly, $1,000 is not enough! Before working the Baby Steps, they had nothing saved for an emergency.

Besides covering small emergencies, getting $1,000 saved is for changing your behavior with money. You get on a budget and start being intentional with your money. Get rid of the non-essentials in your budget and get $1,000 saved. Stop living paycheck to paycheck. This first step is the start. It’s not the end goal.

Small Emergencies

Baby Step 1 is to get $1,000 saved as fast as you can. Don’t take three months to get this money saved. You don’t think $1,000 is enough for an emergency, but then you take many months to get this saved? That doesn’t make sense!

The $1,000 starter emergency fund is for small emergencies. It’s to keep you from taking on additional debt when you have small emergencies. It’s not enough to replace your air conditioner or your roof. If you cannot afford to replace these types of things, then maybe you have a house that you cannot afford. It’s for sure not helping you build wealth if you cannot afford the upkeep.

Your Debt is an Emergency!

Don’t spend nine months on Baby Step 1 because you think you need more than $1,000 for your starter emergency fund. Your debt is an emergency! You bought stuff you cannot afford the upkeep on, and you are paying 18% on your credit card interest. Your financial behavior is an emergency! It’s time for a change so that you can build wealth.

Get $1,000 saved and stop so that you can start paying off your debt. Your debt cannot wait for you to get enough saved so that you can afford to replace everything you own. You need to start giving up the stuff that got you into your debt mess in the first place. You will never get enough saved if you want to be certain you can afford everything that might need to be fixed or replaced. The cycle will never stop.

You Can Cash Flow More than You Think

Even when you “only” have $1,000 saved for a small emergency fund, you have more than you think for an emergency. If you are applying an extra $1,000 to your debt each month, you have that money for an emergency. You can cashflow more than you think.

Storm and Stork Mode

The only time you should be saving additional money instead of paying off your debt is when there is a crisis coming or a baby coming. When you or your spouse have a 50% or greater chance of losing a job, start piling up money so that you can get through that crisis. The same thing should happen when expecting a baby. Save up money for the nine months until mom and the baby are home from the hospital.


Don’t get held up on the first step. This step is so that you can change your behavior with money. Although saving $1,000 is easy, this can be the hardest step. Don’t make it any harder by staying on this step so that you can have more money saved. You need to move on to paying off your debt. Your debt is a big emergency that you cannot afford to ignore.


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