What Is a Nest Egg? What You Need To Know

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September 30, 2022

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What Is a Nest Egg? What You Need To Know

When a bird builds a nest, one of the first things it considers is stability. They learn how to weave in sticks, feathers, and grass to create the sturdiest, most comfortable nest (some birds even go the extra mile to add mud as glue!). Their number one concern is to ensure the safety of their incubating eggs. 

A human, meanwhile, building a "nest" for their nest egg is a similar concept: It's a long-term plan of building a large sum of savings that must be sturdy enough to maintain many years of retirement or future plans. 

Have a Plan for Saving and Spending

The way to guarantee the success of a nest egg is by outlining the logistics leading up to your end goal. Knowing where your savings are is essential, as certain places (like the stock market) offer far more risk than earning cash working at a regular-paying job.

What is your income value? What items do you need to purchase to live? How much inheritance do you/will you have in the next decades (if any)? It’s important to keep track of all your spending and purchases to ensure you’re on track to build your nest egg.

Settling into a nest is meant to be a comfortable and relaxing experience, so put the work in now. Outline the exact percentage or amount you are going to save every payday, and make a chart or keep records to ensure you keep yourself in check. 

Purchasing a journal, or having a physical calendar/notebook can help “ground” you to your task. Set up alarms, ask for advice, and don’t be afraid to be hard on yourself. After all, it is only you who can ultimately determine how serious you are about the way you use, spend, and invest your money.

How Can You Save Money?

There are many ways to save money, and education prevents confusion and loss in the end. Below are just a few catalysts for saving money:

Bonds: This is when you loan money to the government, a corporation, or a municipality and they promise debt security in the form of a bond. Through the usage of bonds, interest payments are predictable, although they tend to require a lot of patience to reach maturity before full payout.

Stock: Stocks are riskier and also a potentially more rewarding way to invest and save money. Stocks are more versatile, and you can withdraw money without needing to worry about a "maturity date" or "fixed interest payments" like you would with bonds. Stocks are, in the simplest terms, a way to gain partial ownership ("share") of the chosen company.

Cash Hideaway: This is a good old-fashioned make-some-money, hide-some-money tactic. However you earn your cash, make sure to save a little each payday to ensure the best possible future for yourself.

Real Estate: Investing in real estate is very risky, but it could potentially generate enough profit to be automatically sent to a savings account. From there, you watch the money grow!

Savings Accounts: Ultimately, setting up a savings deposit account through your bank is the most surefire way to save money. Acquiring a job that offers a 401(k), a Roth IRA, a 401(a), or other plans can be an easier way to manage savings. A little bit of money is put into an account every payday, potentially building up a nice nest egg by the time you retire.

Where Can You Save and Buy?

Banks are, ultimately, the best choice for calculated, consistent savings. Entire accounts are dedicated to having penalties whenever someone decides they want to take from their savings account too early. 

Given that banks are filled with professional brokers and bankers, asking for advice and setting up a time to talk can mean the difference between a healthy nest “egg” and one that may spoil your future.

As far as purchasing bonds go, typically purchases are made through either a bond broker, a bank, or official government sites (specifically for treasury bonds). Determining the type of purchase (full service vs. discount brokerage) and the maximum upfront price you want to pay should then be one of your keenest considerations.

Why Should You Save?

If you want to have a stress-free retirement or if you want to reach a money-saving goal, then developing a nest egg is necessary. Take the two fictional stories below as an example.

Fictional Example

Joffrey is a man who has always been taught to worry about their finances. He graduated from business school a few years ago and is currently helping his parents run a financial advising company. Joffrey witnesses all walks of life requesting assistance and explanations on how to best save money, how to manage investments, and how to become better with finances overall.

One day, a person named Avery visits the advising company with a very rare, but important reason to learn how to better handle building a nest egg. Earlier that week, Avery had won two million dollars from the lottery. Avery had never had so much money to spend at once in their lifetime so she found her way to a local financial advice business.

At first, everything was good. Avery listened to Joffrey’s advice: do not spend all of the money at once, put a certain amount into a savings account, use some more to build a diverse portfolio of investments, and talk to the bank she had been using for specific advice on what accounts to best set up. 

However, as time went on, the amount of spending money that Avery had was falling too quickly. Something wasn’t quite right, and Avery scheduling fewer and fewer advising appointments was steady proof of that.

Joffrey questioned, “What investments are you putting your money into?” She had decided to invest only in real estate, one of the most volatile investment types. She had heard about delusions of grandeur success from ads on the internet. 

She had decided not to save as much money as they initially had planned. That nest egg, she had decided, didn’t need a stable nest. And, because of her lack of understanding of just how important a stable nest is, it only took a few years before those two million dollars were spent.

Ask an Expert for Advice

When it comes down to it, not everyone is the financial saver they imagine themselves to be. Finance is a tricky business, and mistakes can lead to massive obstacles in the long run of earning money. Do not be ashamed or afraid to ask an expert for advice about anything you find confusing.

In the fictional case of Joffrey and Avery, communication was critical from the get-go. If you’re not sure what to do next, finance is not the field to be doing guesswork in. Future comfort relies heavily upon successful earning, investing, and saving money. But not spending money can be like not eating your favorite dessert right in front of you — it’s so tempting and so easy to slip up, especially in such a material country. 

Seeking advice and learning to control spending habits is something anyone who makes a wage or has money must learn to master.

What Is Your End Goal?

Your end goal, if you choose to be a smart investor and saver, should be to have enough money saved to live a long, happy retirement. Even saving for a temporary event, such as a vacation, requires the mental fortitude to refuse to purchase that cool-thing-you-saw-that-you-really-don't-need. Even small purchases of items can lead up to thousands of dollars less than your interest could have doubled.

Having a nest egg not only permits a safer future but also allows for a much easier one. If you think money is complicated now, just wait until you’re getting ready to retire, only to realize that you’ve saved enough money for 10 years and not 20.

Even in fictional storybooks, pirates know that burying treasure to find on another day is a good idea. (Unless you draw a map. Don’t give anyone your savings account numbers, please!)


BrokerCheck | Finra 

Nest egg Definition & Meaning | Merriam-Webster 

What Is a Nest Egg? Saving & Investing Terms to Know | Moneylion

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