Get free, no obligation quotes from multiple providers

State Farm Insurance Allstate Insurance Farmers Insurance American Family Insurance Unitrin Insurance Travelers Insurance

HOW TO START A NEST EGG

Starting a nest egg can help you a lot in the long run. A nest egg is a term used for an accumulation of money. Most people will use their nest egg money as a down payment on their own home; however, a nest egg can also be used to purchase a car, a boat, an upgrade or switch to bigger apartment, a big vacation with the family, to pay for school for the kids, to buy a cabin or holiday home, to pay for a serious operation or anything else. As the nest egg holder, you can choose what to do with your money.

Investing your Money

There are several different ways you can invest in a nest egg. You may choose to open a savings account at the bank in which you contribute a certain amount each week or each month. You can even set up an account where a certain amount of money goes into this fund every month or so from your pay check or from another account. You can choose how much or how little you contribute. Some people prefer to invest a large sum of money, like $10,000 up front while others choose to only add smaller increments (say $50 per week) for a period of time.

Or, you may choose to invest the money in a term deposit or RRSP. You can contribute larger amounts of money once a year until the deposit matures in several years. This is the best way to make some interest on your money but it also means you cannot take the money out until the deposit has matured. If you choose to dip into the deposit ahead of the maturity date then you will face a fine.

Many people prefer to keep their money where they can see it and thus put a few bucks in a jar, under a mattress or in an envelope each week. While you won't be making any interest with your money hidden in your sock drawer, you are also not paying any fees to the bank. You know exactly where your money is; however, you also may be tempted to spend it, especially if your favorite store is having a sale.

Budgeting for a Nest Egg

Most people are pretty tight in terms of their weekly budget and you may not have any money left over after paying the rent, the groceries, the car repayment and the other bills that pile up so quickly. However, if you can find even $100 extra dollars each month to put away you could be looking at $1200 per year. If you have invested this money, then it might be more like $1500 per year. After ten years you will have a pretty decent down payment for a house; after twenty years, you will have enough money to pay for college for your children. After thirty years you will be able to purchase that caravan to enjoy your retirement on the road.

Once you know how to start a nest egg, you will have something to fall back, similar to having insurance. After all, you never know when something could break and you will need some extra cash. While no one wants to use their nest egg money to pay for an emergency, this is sometimes necessary, especially if you do not have adequate insurance for life's bumps on the road. In addition to investing in a nest egg, be sure to also purchase renters contents insurance to protect for material items while you are renting. After all, the whole point of having a nest egg is watching it grow, even if you are in an emergency situation.

Learning Center