You know how important it is to have an emergency fund for weathering financial disasters. But when you’re living paycheck to paycheck, starting an emergency fund can be tough. If you’re already spending every penny you have just to pay the bills, putting aside three to six months’ worth of living expenses seems like an impossible goal.
But you can give yourself a lot of financial breathing room by scraping together just $1,000. It’s enough to cover unexpected expenses like a car repair or emergency root canal without pulling out credit cards — a crucial step if you’re trying to break the debt cycle.
For most people, creating a $1,000 initial emergency fund is an achievable goal. With a little effort, you can even create one in a month or less. And there are many strategies you can use to make it happen.
Strategies to Save $1,000 in a Month
The first place to look for savings is in your household budget. If you’re like most people, some things you spend money on each month could be cut — or at least reduced. Trimming these expenses while reducing your debt burden can provide quick cash to put toward your emergency fund in the very first month, and many will continue to free up extra money in your budget every month after that.
1. Find Your Budget Busters
Nearly everyone has a couple of sneaky budget busters that are derailing their attempts to save. In many cases, these are costs you’re just so used to paying it’s never occurred to you to find ways around them. Examples include:
- Cable TV. According to a 2019 study by Leichtman Research Group, roughly 1 in 3 American households no longer relies on cable or satellite TV. The reason is obvious: It’s the cost. According to the research, the average cost of paid TV service in 2019 was nearly $110 per month, while streaming services like Hulu and Netflix typically cost less than $15 per month. By swapping out your cable for streaming, you could add about $100 to your emergency fund in just the first month, getting you one-tenth of the way to your goal.
- Utility Bills. The 2019 Consumer Expenditure Survey by the United States Department of Labor shows that the average U.S. household spends about $337 per month on utilities like gas, water, phone service, and electricity. You can do a lot of little things to reduce those utility bills without a large upfront expense. For instance, in the summertime, using a fan instead of running your central air conditioning for four hours each day could save you about 400 kilowatt-hours of energy per month. Based on figures from the Energy Information Administration, that’s about $53 worth.
- Bank Fees. A 2021 GOBankingRates survey found that the average American pays $7 each month in bank fees. That doesn’t sound like much, but there’s no reason to pay it at all. You can avoid most bank fees by taking a few simple precautions, such as keeping a close eye on your balance, sticking to your own bank’s ATMs, and always waiting for checks to clear. Or if the fees at your bank are simply too high and hard to avoid, choose a new bank where the fees are more reasonable. If you can manage to prevent just one overdraft fee, you can save about $30.
- Bad Habits. In addition to the effects bad habits like smoking, drinking, and gambling can have on your health, they’re also bad for your wallet. Smoking a $7 pack of cigarettes per day costs over $200 per month. Drinking two $1.50 beers every evening costs about $90, and buying a $2 daily lottery ticket costs about $60. If you can’t kick these bad habits entirely, just cutting down by half can still give you a nice chunk of change to stash in your emergency fund.
- Eating Out. According to the Consumer Expenditure Survey, the average household spends about $293 per month on food consumed away from home. That includes everything from your daily latte to a dinner out with your spouse. If you don’t want to quit eating out entirely, you can still save by cutting back. Eliminating two lattes each week can save you about $25 per month. Taking your lunch to work two days per week can save you around $40, and skipping just one dinner out for two will save you at least $20.
- Bottled Water. It’s crazy the amount of money Americans spend on bottled water when most of us can get perfectly good, safe water from a tap for nearly nothing. If you can replace just one $1 bottle of water per day with tap water, you’ll save $30 in a month.
2. Lower Your Monthly Bills
Some expenses aren’t optional. When you get a monthly bill for your phone, Internet, or electricity, you have to pay it if you don’t want to lose your service — right?
Well, not exactly. The price on the bill isn’t necessarily the price you have to pay. The companies that provide these services are often willing to negotiate with you over costs rather than risk losing you to a competitor.
You can call the companies and negotiate on your own, but you’re likely to have more success with less work if you hire a third-party service to do it for you. Services like Trim, Truebill, and Billcutterz do the bargaining for you in exchange for a cut of the savings, which ranges from 33% to 50%. If they can’t find any savings for you, you pay nothing.
The amount you save depends on which service you use and what bills you have. Trim says it can save you up to 30% on cable, phone, and Internet bills, but it keeps 33% of the savings. BillCutterz can negotiate even more types of bills, such as insurance and credit card interest rates, but it takes a 50% cut of the savings.
If you currently pay $170 per month for all your bills, one of these services can probably cut that amount by around $50. At least $25 of that savings goes into your pocket.
If negotiating with your providers doesn’t get you anywhere, shop around for new ones. For example, switching to a cheaper cellphone plan could save you as much as $85 per month. You can also save on your car insurance by shopping around. A service like Esurance or The Zebra can help you get multiple quotes in a matter of minutes.
3. Negotiate for a Better Rate
Credit cards are a useful tool, but the interest on them can be punishingly high. According to U.S. News & World Report, the average annual percentage rate (APR) for new credit cards in April 2021 ranged from 15.56% to 22.87% — at a time when the best high-yield savings accounts on the market were paying only 0.5%.
But if you have a good credit score and decent negotiating skills, you might be able to talk your credit card company into lowering your rate. Start by looking at offers for similar credit cards. If you find one with a lower interest rate, write down the details, then call your credit card issuer and ask them if they can beat it.
Explain that if the issuer can’t lower its rates, you plan to open a new card with the other issuer and transfer the balance. That would mean all the interest you’re paying would go to the new issuer, so it gives your current one a good incentive to negotiate. There’s a good chance it will agree to at least match the other company’s interest rate to keep your business.
If it isn’t willing to negotiate, try calling back on a different day and making the same pitch to a different customer service rep.
If you still get nowhere, follow through on your threat to transfer your balance. If you can find a credit card with a low-interest or 0% balance transfer offer, you can pay off your balance faster without increasing your monthly payment. You might even be able to pay it off entirely before the zero-interest period runs out.
For example, suppose you have a $3,000 balance on your credit cards at 18% APR, and your goal is to pay it off in two years. As things stand now, you must pay $149 per month and a total of $594 in interest.
However, lower your APR to 15%, and you can reduce your monthly payment by $4 and your total interest by $103. Switch that balance to a card with a 0% APR for the first year and 15% APR after that, and if you keep your payment at $149, you can save over $500 in interest and still pay off the card three months early.
4. Refinance Your Loans
If you can’t reduce the interest on your debt by negotiating, look into refinancing. You can refinance credit card debt by transferring your balance to a new card with a lower rate. But it’s also possible to refinance a mortgage, car loan, or student loans. If you have several different debts, you could save money by consolidating them into a new loan at a lower rate.
Refinancing has the potential to save you a significant amount of money. For instance, suppose you bought your house with a 30-year, $150,000 mortgage at 6% APR, giving you a monthly payment of $900. After nine years of payments and prepayments, you still owe $100,000.
If you can refinance to a new 15-year loan at 4.5%, you can lower your monthly payment by $135. That lets you save more than $85,000 over the life of the loan — and be out of debt six years sooner.
Refinancing isn’t always a good deal. When you refinance, you often have to pay an origination fee on the new loan, which could be around 5% of the total balance. Refinancing is only worthwhile if the savings is significant enough to offset this upfront cost.
A refinancing calculator, such as the one available at Quicken Loans, can help you figure out whether refinancing your debt is a smart idea for you.
Several websites can help you find a reasonable rate on a refinancing loan, including:
- Credible. If you want to refinance your mortgage, Credible can get you offers from several competing lenders. The site asks you a few questions, sends a request to lenders, and shows you offers within seconds. In many cases, you can choose the best loan and apply for it immediately online.
- SoFi. This site is the top refinancing provider for student loans. You can complete the entire loan process online and choose from various rates and terms, depending on whether you want the most savings or the lowest monthly payment. You can also use SoFi to consolidate multiple student loans into one. The site charges no origination fees or prepayment penalties if you choose to pay off your loan early.
- Fiona. This site can help you take out a personal loan for debt consolidation. Like Credible, it asks you a few questions and then presents you with offers from multiple lenders.
Credible Operations, Inc. NMLS ID# 1681276
Strategies to Make $1,000 in a Month
If you can’t find anything else in your budget to cut and you still haven’t reached your $1,000 target, it’s time to look at the other side of the equation: your income. Instead of spending less, look for ways to make money.
5. Collect Shopping Rewards
One of the easiest ways to make a little extra money is to take advantage of shopping rewards apps that give you rebates when you shop, both in stores and online. These apps get a commission from stores for steering business to them, and they split that money with you. Depending on the app and the store, you can get back 1% to 12% of what you spend.
These apps include:
- Rakuten. When you shop online through the Rakuten app, you can earn cash back at more than 2,500 stores, including Amazon, eBay, and Walmart. A typical rebate is between 2% and 5% cash back. You get paid by check or PayPal every three months.
- Capital One Shopping. When you use your computer to shop Amazon, Capital One Shopping (formerly Wikibuy) scans offers from other sellers to see if there’s a better price. You can also use the Capital One Shopping mobile app to search for products and compare prices from partnered retail sites. Plus, Capital One Shopping automatically adds available coupon codes to help you save even more money.
- Paribus. Also from Capital One, Paribus helps you get the lowest price when you shop online. You give the app access to your email, and it scans your inbox for receipts from its partner stores, such as Amazon, Target, and Macy’s. The app then monitors the price of all the items you bought, and if the price drops, it helps you collect a refund.
- Ibotta. With the Ibotta app or browser extension, you earn cash back on specific products at specific stores. You use the app to unlock a deal at one of Ibotta’s 300 partner businesses, then buy the product and scan the receipt. You can also earn 10% cash back for paying with the app in stores and online. Rewards go into your in-app account. Once you’ve earned $20 in rewards, you can trade them in for cash.
- Shopkick. With Shopkick, you can earn rewards, or “kicks,” even when you don’t buy anything. The site offers some kicks just for visiting particular stores — in person or online — or viewing specific products. If you purchase it, you earn even more kicks. Once you have 2,500 kicks, you can cash them in for a $10 gift card.
The amount you can earn with these apps depends on how much you spend at participating stores. For example, if you spend $200 online in a typical month, Rakuten could earn you around $10 cash back. However, you have to be careful. If these apps lead you to buy more stuff just to get the rewards, your extra spending eats up all your earnings and more.
You can multiply your earnings by using both a rewards app and a cash-back credit card. These cards typically earn you 1% to 1.5% cash back on all your purchases. However, some cards, like the Chase Freedom card, pay up to 5% cash back in certain stores at specific times. To maximize your rewards, keep track of these bonuses and use the card with the biggest reward.
6. Do Online Surveys
Another way to earn a little cash each month is to fill out online surveys in your spare time. Survey sites that pay for your opinion include Swagbucks and MyPoints, which also offer shopping rewards, as well as Survey Junkie, InboxDollars, and E-Poll.
You can’t earn a lot of money taking surveys. A typical 20-minute survey only pays about $1 in rewards. However, if you fill out paid surveys while you’re on a Netflix binge or waiting for a bus, you can pick up an extra dollar here and there all month long. If you spend just a couple of hours filling out surveys each week, that could add up to around $10 for your emergency fund.
Also, both Swagbucks and InboxDollars pay a $5 sign-up bonus once you’ve completed your first few surveys. If you sign up with both these sites and complete the required number of surveys in one month, you get at least $10 toward your emergency savings right off the bat.
7. Get a Side Hustle
Shopping rewards and online surveys are easy, but they don’t pay much. You can earn a good deal more by taking on a side hustle in addition to your full-time job. The modern gig economy offers lots of choices for earning extra income in your spare time, including:
- Ridesharing. A 2020 analysis by TheStreet found that you can earn between $8.55 and $11.77 per hour driving for a ridesharing app such as Uber or Lyft. That’s about on par with working at McDonald’s and less than you’d make as a clerk at Walmart, but it offers the advantage of setting your own schedule. Driving for one of these services for just four hours per week can earn you about $172 for your emergency fund.
- Food Delivery. You can also earn extra cash making deliveries for services like Uber Eats, DoorDash, Instacart, and Postmates. These services offer flexible hours and quick payment. According to USA Today, earnings for drivers average between $10 and $20 per hour. With four hours of work per week, you could earn about $255 per month.
- Car Sharing. If you don’t use your car every day, you can share it with others and get paid. Companies like Turo, HyreCar, and Getaround let you set your rates and start earning passive income from your idle car. According to Turo, car owners who share their vehicles on the service earn an average of $706 per month.
- Airbnb Hosting. If you’ve got a spare room in your house, you can rent it out on Airbnb as a place for travelers to stay. The site takes care of all the details of booking, payment, and insurance in exchange for 3% of your earnings. The amount you can make this way depends on your space and location. According to a 2020 analysis by student loan company Earnest, Airbnb hosts earn an average of $973 and a median of $400 per month.
- Odd Jobs. On TaskRabbit, you can find people in your area willing to pay you for a variety of odd jobs. A person in the New York City area could earn between $65 and $147 for assembling furniture, $87 to $155 for cleaning a kitchen or bathroom, and $76 to $124 for hanging a TV or mirror. The site charges a $25 registration fee, but all earnings after that are yours to keep. According to Earnest, taskers earn an average of $380 and a median of $110 per month. There are also other sites where you can sell specific types of services, such as Rover for pet-sitting and VIPKid for teaching English online.
- Online Freelancing. You can make money online in a variety of fields, including freelance writing, proofreading, bookkeeping, computer programming, graphic design, data entry, marketing, and serving as a virtual assistant. You can search job boards like Guru and Freelancer or sell your services through sites like Upwork, and Fiverr. According to Glassdoor, different types of freelance work can pay between $10 and $71 per hour. If you work 10 hours per month as a freelance writer earning $20 per hour, you can add $200 to your savings.
8. Boost Your Rate of Return
Finally, if you want to save money as quickly as possible, it makes sense to maximize the value you get out of the money you already have in savings.
As of January 2021, the average annual percentage yield (APY) on a standard savings account is just 0.05% — not even enough to keep up with inflation. In other words, any money you have in a basic bank account is actually losing value over time.
You can boost your return somewhat by switching to a high-yield online savings account. For example, if you have $5,000 in a bank account earning 0.05% APY, you’re earning just $2.50 in interest per year. If you move that money to an online savings account with a 1.0% APY, you’ll get $50 per year. It’s still not much, but at least your savings won’t lose value as quickly.
One of the best choices for online banking is the savings account from Varo, which pays up to 2.80% APY. To earn this rate, you must receive direct deposits of at least $1,000 per month and make five monthly purchases with your debit card. Varo also offers an online bank account with no fees and a paycheck advance service that gives you access to your earnings two days early.
None of the steps listed here can earn you $1,000 in a month all by itself. However, there are many ways to combine several of them to reach that goal. For instance, you could save $100 by cutting your cable, $100 by refinancing your mortgage, $30 by giving up bottled water, and $30 by renegotiating your bills. That gets you to $260 (which you’ll keep saving month after month).
You can then earn the other $740 through a combination of jobs. You could rent out a room on Airbnb for six nights to make $270, do six $75 jobs on TaskRabbit to earn $450, and pick up the remaining $20 from online surveys and shopping rewards.
And that’s just one example of how to combine these strategies to make $1,000 in one month. If it doesn’t work for you, no problem. Just swap the strategies in this example for different ones. With so many options, there’s sure to be some combination that works for you.