How To Save Your First $1,000

When you’re ready to get your finances into shape, one of the biggest challenges is being ready to deal with unexpected expenses.

According to recent research, almost one-half of Americans live paycheck to paycheck. When you’re living on the edge like that, everything is planned out.

Even if you are trying to get ahead, one setback — even a relatively small one — can mean the end to your savings efforts. Indeed, about 62 percent of Americans are one paycheck away from the street according to data cited in a recent story from Marketwatch.

These Americans living so close to the edge (and many of them are considered middle class) don’t have enough money to pay for a $500 car repair or cover the cost of a $1,000 visit to the emergency room, according to Marketwatch. Just having a small emergency fund to cover these types of unexpected expenses could go a long way toward helping many Americans move forward with their finances. If you are looking to save your first $1,000 so that you have a cushion to help you in times of trouble, here are the steps to take:

1. Pay Attention to Your Spending

The first step is to pay attention to your spending. Many of us spend money without really registering what we’re doing. Track all of your spending for at least a month to see where the money is going. Track every dollar. When you swipe your credit card, save the receipt and write down each thing you spent money on. If you use cash, make an immediate note of it in a small notepad or snap a quick picture of your purchase with your smart phone.

Once you know where the money is going, you’ll have a better idea of what you can cut. On average, Americans waste between 10 percent and 15 percent of their monthly incomes on things they don’t need. Pay attention to what you buy and identify that waste. Cut back on wasteful spending and funnel it into your savings.

2. Set Aside a Small Amount to Start

Most of us need to work up to making long-lasting changes in our lives. You can do this as you move toward saving your first $1,000. Break down your goal into bite-sized and manageable chunks. When you feel strapped for cash, it feels impossible to set aside $200 a month for savings. Instead of thinking about it that way, break it down into something that feels easier. Saving $200 a month is the same as setting aside $7.14 per day.

Perhaps you don’t feel like you can set aside that much to start.

The important thing is to develop the habit, and then step it up. Even if you have to start with $10 per week, that’s still better than $0. Start small, and as you feel comfortable with your small amount, add a few dollars more to it. After a month or two, see if you can set aside $15 per week, and then $20 after that. It will get easier as you identify your spending waste, cut back, and then put that money toward savings.

3. Make it Automatic

Finally, one of the best ways to get your first $1,000 in the bank is to make your savings automatic. Have a set amount taken out of your checking account each month and transferred to your savings account. There are even new tools, like Digit.co, that will analyze your patterns and figure out how much you can afford to save on a daily basis and transfer the money for you. It can be surprising to see where you could save more without realizing it.

You can save your first $1,000. When you start paying attention to where the money is going, and you start small and make it manageable, you will be surprised at how quickly you reach your goal.