The “nest egg” is the goal of just about every adult. We all want to have that amazing (ideally quite large) fund that we can use to fund things like new homes, advanced degrees, retirement, etc. We all know that we want the nest egg. Unfortunately most of us sabotage our own efforts—sometimes without even meaning to. Here are four mistakes that you should not make if you want to build up the best nest egg possible.
1. Don’t settle for whatever savings account the bank offers. Obviously the type of savings account you open is up to you, at the same time there are so many great choices out there. With a little bit of research you’ll find an account with a great interest rate that comes with the perks you want the most. Take the time to meet with several different banks to see what kind of accounts they can offer you and what they can do to help you meet your goals. There is no rule that says you have to have your savings account at the same bank that runs your checking account. There are even amazing internet savings accounts that you can set up.
3. Don’t dip into your nest egg to fund “fun stuff” that you don’t actually need. While you might need to dip into your nest egg for actual emergencies (medical, etc) do your best to keep your sticky fingers out of it. The easiest way to do this is to not link your savings account to your checking account. This way getting the money out will be much more difficult and you’ll actually have to decide whether or not you really need whatever it is you want to dip into your savings to buy. Better yet, set up your nest egg account so that you can’t dip into it until you retire (or another condition you set up with your bank).
4. Don’t simply keep your nest egg in cash. We’ve talked about interest (and compound interest) already so you know the perks of keeping your cash in the bank. What you might not realize, is that keeping your nest egg in cash on hand actually costs you money. With inflation rates what they are, there is no way that the $36,000 you’d save over thirty years is going to go as far as it would today. In thirty years, that $36,000 in cash might only go as far as $12,000 would today (and that’s being optimistic)!
These are just four ways to ensure that your nest egg is as big as possible. With a little bit of research you can turn up lots of other things you can do to ensure that you’ll be solvent later in life.
Stephen Joseph runs a freelance writing business in Seattle, Washington and he specializes in writing for small businesses.