How to Save a Starter Emergency Fund (Baby Step 1 – Dave Ramsey’s Plan)

If one car repair or a surprise bill would send your budget into panic mode, you’re not alone.

That’s why Dave Ramsey’s Baby Step 1 is all about saving a Starter Emergency Fund — usually $1,000 — as fast as possible.

This isn’t your long-term savings. It’s your financial life jacket — the thing that keeps you from drowning in debt when the unexpected happens.

Here’s HOW:

1. Pick your target Amount – In the U.S., that’s $1,000. In higher-cost areas, aim for one month’s bare-bones expenses.
2. Sprint to save it – Sell items you don't use, cut non-essential expenses, pick up-side gigs - for extra income.
3. Park it safely - (But Not Too Accessible) – Savings account linked to your checking (same bank for fast transfers) or money market; avoid spending temptations.
4. Use it only for true emergencies – Here’s the golden rule: An emergency is unexpected, necessary, and urgent.
5. Replenish fast – If you use it, refill it before doing anything else. The moment you spend any of it, pause extra debt payments and refill it to the $1,000 mark.

Pro tip: Ask yourself before spending it:

Will life get worse in the next 24 hours if I don’t pay this?
If not, it’s not an emergency.

Your starter fund won’t make you rich, but it will keep you standing when life throws the first punch.

P.S. Baby Step 1 is the moat around your financial castle. Build it now, so you can focus on conquering debt next.

Before You Pay Off Debt, Do This First