How (and Why) To Get Started With A $1,000 Emergency Fund?

The Fellowship of Penny Calling Penny
December 13, 2022
$1,000 Emergency Fund
$1,000 Emergency Fund

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What would you do if you were faced with an emergency expense? Say, a bill that ran you a couple of hundred or (gulp) even thousands of dollars out of nowhere? 

It might be tough to come up with the cash if you’re like most Americans. According to a Nationwide Poll Conducted in December 2020, fewer than four in 10 Americans have a $1,000 emergency fund set aside to cover a surprise expense. And when you don’t have money to pay an unexpected bill, that might mean you need to take out a high-interest loan, dig into your savings account, rely on credit cards, or ask a friend or family member for funds to float a purchase.

Not ideal.

That’s why it’s essential to sock away money in an emergency fund regularly. So, you’ll be prepared when life throws you its inevitable financial curveballs.

Here’s an overview of emergency funds, where to stash your cash, and ways you can pad your account this year.

Back Up: What’s An Emergency Fund?

An Emergency Fund is a dedicated amount of money you set aside for pop-up expenses.

For example, say you accidentally hit a curb and have to replace a flat tire for your car. Or, you unexpectedly lost your job and need buffer cash as a bridge to pay for bills until you get unemployment benefits. This fund is a secure source of money—typically separate from your regular checking and savings accounts—that you can rely on in emergencies.

Emphasis on emergency—this account shouldn’t double as your vacation or “fun money” fund. It’s essential that you only touch this money when needed.

Do You Need To Have A $1,000 Emergency Fund?

You want to have at least a couple of hundred dollars in savings, but try to stretch it to four figures. A $1,000 emergency fund is a good goal to aim for if you’re just starting.

Ideally, you want your emergency fund to have enough money to finance three to six months’ expenses. Some experts recommend a year. Depending on your situation, this amount will vary from person to person.

When determining your emergency fund amount, it’s helpful to draw up a budget. You can create a “bare-bones” budget (think: rent, food, utilities, and other essential bills) and an “every day” budget (one that includes your basic expenses, plus non-essentials, such as streaming services and Uber Eats expenditures). Compare the figures and see the amounts you’d need to save to cover bills for each one and go from there.

This emergency cash reserve should be held in a different account from your regular banking needs. Even better—consider automatically transferring money to this account weekly or monthly to keep it growing.

Where Should You Keep Your Emergency Fund Money?

When it comes to where you should keep your emergency fund, there are a few recommended options:

  • A separate bank account (this could be with your regular bank or another institution entirely).
  • A high-yield savings account (bonus points if you can access this account via an app or debit card).
  • An online-only bank or fintech company (these institutions tend to offer higher interest rates).

The bottom line, keep your emergency fund in an easily accessible account. So, not in a five-year CD. You also want to avoid putting this designated money in a volatile account (think crypto) or someplace where you might incur fees or penalties for taking it out before a designated period.

And pro tip: Look for banks and accounts that offer new-customer bonuses. By following certain guidelines (for example, opening your account with a set amount of money and leaving it there for 60 days), you can earn money—usually a couple of hundred dollars—toward your emergency fund. That’s a win-win!

Now that you have the basics, here are ways to start adding to that fund.

5 Ways You Can You Build Toward Your $1,000 Emergency Fund In 2023

Consider these opportunities to make and save money for your emergency fund.

1. Automatically—and regularly—transfer money from your personal account

Set it and forget it. If you get paid at your job twice a month, set up a recurring transfer to your emergency fund. Any amount is a good start; you can increase it if you experience a bump in income. 

2. Find ways to trim your existing bills

Review your current expenses and see where you can save money. If you have multiple memberships, monthly subscriptions, and streaming services, it might make sense to cancel one or more. You can also try to negotiate bills (like with your auto insurance company) and interest rates (like your credit card APR). Ten dollars here and there can help you pick up steam for your savings.

3. Start a side gig

There are many ways to make money, whether you’re looking to earn money on top of your full-time job or cobble together multiple gigs. Join sites like,, or, where you can make extra cash doing tasks from graphic design and coding work to building IKEA furniture by the hour. Dog-walking, pet-sitting, and meal-delivery services are other popular options. Depending on how much time you can dedicate to these gigs, you can make serious money—especially if it’s an in-demand service or popular time of year (like watching someone’s cat over the holidays).

4. Save money with apps

What’s better than earning points or cash for purchases you need to make anyway? You can earn rebates through the Ibotta app for everyday shopping at major outlets. Download the app and visit participating stores before you shop. If you’re brand agnostic, you can use Ibotta to save money on staples such as bread, fruits, and canned goods. Once you hit $20 in the app, you can redeem the cash and ship it straight to your emergency fund.

5. Make money off items you no longer need

Want to get rid of an old purse or sell your quarantine-inspired homemade crafts? Try auction sites like and online marketplaces like Similarly, smartphone apps like Mercari are a great way to easily upload photos and details of the items you want to sell. You can list products on your phone for consumers to purchase outright or make an offer. Whatever profits you make can be funneled to your account.

Start Saving For Your $1,000 Emergency Fund Today

Don’t get discouraged if you can’t fulfill a $500 or $1,000 emergency fund out of the gate. Small steps are valuable and will help you reach your larger role. 

Stay determined on your savings journey. Think of an emergency fund as a gift to your future self—one you’ll be thankful for if and when you run into an unexpected expense.

It is no secret that managing your money can be challenging. You may feel like you’re always scrambling to find the money to pay bills.

But there are ways to make it easier on yourself. Subscribe to our newsletter now and start making the most of your hard-earned dollars.


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