Let’s face it, saving to build a nest egg for your future is hard. What with all the scrimping and pinching you are already doing to get by on your monthly income, setting aside some savings can be tricky.
Even though right now, it may feel like you can not spare an extra couple of dollars to go into building a nest egg for your future – the bottom line is, you can save toward your future too, even from a small income.
You need to learn, master, and have the discipline to implement proven, time-tested money strategies to grow a nest egg.
Here are a few suggestions on how you might do this.
Understand your current financial position
Before you do anything else, take the time to go through your finances. How much do you make in a month? Where does all the money go to?
The first question is pretty easy to answer; if you are a salary earner with one source of income, a look at your payslip is enough.
However, answering the second question might require a bit of work. You may want to set up a system to track every cent you spend for a month. At the end of the month, take a look at the spreadsheet to see where you are spending money.
Now, you have an idea of how much you make in a month and where you spend your money, compile a budget for your living expenses. Remember to ask, are there things you can cut back on or completely do without?
The idea is to see what you can do to free up funds that will go into building up your savings.
If you are self-employed and carrying a small business loan or private money loan, you will also want to factor in the smartest ways to repay this loan early so that you can continue to grow your financial reserves into the future.
Build an emergency fund
Once, you have your budget set up and have some money to save, channel some savings into establishing an emergency fund.
Aim to have at least, six months’ worth of living expense saved away. Your emergency fund acts as a buffer against any unexpected expenses that might come up. This way, you do not have to dip into your nest egg.
Try and find a savings account that has a high-interest rate, so whilst your emergency fund sits idle, you are at least making a little bit of money out of it.
Take advantage of any match contributions
If the company you work for has an employee retirement program, you may want to consider contributing your own money to take advantage of the full match money on offer.
Thankfully, these kinds of accounts have tax benefits, which you can help you even grow your savings faster.
Create an investment portfolio
While saving for retirement is a great place to start, you may want to take things a step further by creating and funding an investment account.
Your aim with this investment account is to save enough cash for investment purposes. Next step, is to develop an investment strategy. You may want to hire a professional personal finance expert to walk you through what to do.
Building a nest egg of wealth can give you lots of options in retirement. You can easily maintain your current level of lifestyle or even take it a notch higher by opting to live in a resort-style retirement village like an over 55’s resort.
Finally, leverage compound interest
All these strategies will amount to nothing if you do not take action and actually invest.
At this stage, you are ready to put your funds into investment vehicles. Take advantage of the compounding effect of money to stack up a nice nest egg for your future.
Understand that the earlier you start investing, the more time your money has to grow. The beauty of compounding growth is that you can decide to stop putting in cash in the investment vehicle after a while, and still the money will keep growing.
Fact is, there is no magic pill to building a nest egg. You have to do the work. You have to save. You have to develop sound financial knowledge. And you have to invest your money wisely.
However, all things being equal, these strategies will guide you stack a healthy nest egg that will serve you well in your retirement.
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