Step 1: Build a Starter Savings Fund

Make sure to check out the full step by step post below! 

Starting your journey to financial freedom begins with one key step: building a starter savings fund. This may sound simple, but it sets the foundation for every financial move you make in the future.

Why You Need a Starter Fund

Life happens. Your car might break down, a medical bill could pop up, or your washer might decide to quit working. Without an emergency fund, the first reaction is often to swipe a credit card—which only digs you deeper into debt.

By saving $1,000–$2,000 (1 month of bills), you create a financial cushion that keeps you from relying on credit. This is your safety net, your first step toward peace of mind.

Spotlight: Dave Ramsey’s Total Money Makeover

One of the core principles in Dave Ramsey’s Total Money Makeover is the Baby Step to save $1,000 fast. But “fast” doesn’t mean magic—it means making significant cuts now.

You already know where your money is going, so now is the time to:

• Cut back on morning coffees

• Eat in more often

• Pause weekly pub nights

• Redirect all extra funds toward your emergency fund

The goal is simple: get that starter savings fund built as quickly as possible.

Choosing the Right Account

Where should you put your emergency fund? There are tons of options online, from high-yield savings accounts to money market accounts. Do your homework and pick one that’s trustworthy.

I personally use a Vanguard money market account because:

• It’s tied to my brokerage account (great for investing later)

• It currently earns 4.21% interest, compared to 0.01% at a traditional bank

• Transfers to and from my checking account are quick and easy

I keep just one month of bills in my brick and mortar savings account and the rest of my emergency fund in my money market account so it can grow safely.

Taking Action

Here’s what this step looks like in practice:

1. Open your account and link it to your checking.

2. Cut discretionary spending temporarily to free up cash.

3. Focus on building your cushion.

4. Decide whether to tackle debt aggressively (if you have debt) or continue growing your emergency fund.

Remember, this isn’t about getting rich overnight. Financial freedom looks like:

• No debt weighing you down

• A paid-off or mostly-paid-off home

• Consistent contributions to a Roth IRA and 401(k)

• Peace of mind knowing you can handle any unexpected expense

With discipline, you may not be a billionaire—but you will become a millionaire. Later, we’ll break down exactly how much money you need to never worry about finances again—it’s far less than most people think.

Wrapping Up Step 1

By the end of this step, you should have:

• $1,000–$2,000 (1 month of bills) in a high-yield savings or money market account ready for growth!

• All debts written down

• Income and expenses clearly mapped

Take a moment to pause. How are you feeling? Excited? Nervous? Motivated? That’s normal. You just laid the foundation for financial freedom, and every next step will build on this momentum.