A financial “nest-egg” refers to a substantial sum of money that an individual or family has saved and intends to use for a large purchase (like a home or vehicle) or to invest. It is one of the most widely employed and effective ways to begin building a safety net for your future. But building one is not as simple as it sounds. People often wonder what the best vehicle for returns on their savings is, what their target should be, and most importantly, how to start saving in the first place.
In this article, we thought we’d share some of our insights and tips on the best methods for building and maintaining a nest-egg. That way, when you’re ready, you can start saving with confidence and clear goals.
Where to Save
First things first: deciding where to save your money. You want to choose an account that will offer you a return via interest, but so-called “high-yield” savings accounts typically necessitate a high minimum balance to take advantage of the favorable interest rate. Your journey when building a nest-egg will usually begin with less capital. However, that doesn’t mean you can’t get a return on your money.
CD’s
Certificates of Deposit can be a great solution for those who are committed to long-term saving goals, and who don’t need to the money for some time. They offer fantastic interest rates, but users can incur penalties for early withdrawals, so be certain of your goals and have another option for emergency expenses before committing. Equity Bank CD’s
Money Market Accounts
A fantastic option for those who are unfamiliar with investing, but want to put their money to work. As your account grows, you can unlock access to better interest rates, and continue the upward climb. Explore Equity Bank MMA’s
Savings Account
Simple, safe and accessible, perfect for those who are starting to build their savings. Get Started Today
What’s the Goal?
Opinions vary on what exactly constitutes a comfortable nest-egg. Many experts say that, if the goal is to save for retirement, a 30-40 year old worker should have roughly double their annual salary saved. If you’re using the proper savings vehicles, this number can balloon to roughly triple your income by the time you reach 50, and continue growing from there.
It’s important to keep in mind that this is entirely separate from dedicated retirement accounts, like an IRA or 401(k), and also depends on the amount a person is making. If you work in an industry like technology or finance, saving double your annual salary may look much different than it would for a tradesman or teacher.
If you’re having trouble deciding what saving should look like for you, visit your local Equity Bank branch and speak to a professional; they will offer clear guidance on your best path forward.
How to Get Started
If you’re just starting to save, all the advice about how and where and why to save can seem a bit overwhelming. Luckily, there’s a very clear cut answer on what you should do to start saving effectively. Most experts agree that roughly 10-15% of your monthly income should be put aside towards saving. Budgeting just 10% may not seem like much, but staying disciplined can make an enormous difference down the line when unexpected expenses creep in, or you’re looking to move your money to a high-return account.
Budgeting for savings also gives you a much clearer picture of how to distribute your remaining income. Suddenly, deciding what proportion to dedicate to entertainment, transportation, bills, and groceries become much clearer. If you’re having trouble creating a budget, take advantage of Equity Bank’s online budgeting tools and get the most out of your hard earned money.
Building your nest-egg takes time and patience, but with the right tools, you can begin to effectively save and set yourself up for future success. Let the experts at Equity Bank help you discover which services are right for you, and begin your journey to financial freedom. Contact us today or visit your local branch to get started.