How to avoid dipping into your nest egg

A nest egg is an amount of money that is saved for emergencies, retirement or a big event. If you do not have a nest egg, you can potentially find yourself in difficulties. The reason for this is that you will not have funds to take care of yourself when an event like retirement takes place. Fortunately, there are many things that you can do so you can avoid dipping into your nest egg.

Start to save

According to Johnston Grocke, the first step to having a strong nest egg is to start saving right away and continue to do so. If you do not save any money, you will inevitably be dipping into your nest egg because if you are spending and not saving, it would be impossible for your nest egg to not be depleted. The website also wisely recommends looking into government support as a means to ensuring you do not need to dip into your nest egg in the near future. 

Consider the rate of return on your nest egg

The Wall Street Journal suggests investing your nest egg so you can earn a rate of return on it. However, it is important to be careful to avoid making a risky investment. Keep in mind the wise words of financial planning expert Michael Finke:

“You might be too tempted to increase risk if you pay too much attention to portfolio return, and risk means a higher chance of both success and failure.”

As long as you are prudent with where you are putting your money such as an interest bearing back account, you should be alright with your nest egg planning. Investopedia has suggested that a nest egg should be  “invested in relatively conservative instruments such as certificates of deposit, bonds and dividend-paying blue chips.”

Think long term

As investopedia says, nest eggs are often “earmarked for longer-term objectives, the most common being retirement, buying a home and education.” If you are constantly spending your money on frivolous things, you will never be able to keep your nest egg without dipping into it. If you set a goal of something you might use your nest egg for such as a trip around the world, you are much more likely to not dip into it.

Find cheap hobbies

If you love drinking champagne and dining on caviar, it will be very difficult to not dip into your nest egg unless you earn a lot of money. To make sure you save more and keep your nest egg intact, watch a free movie on the television instead of going to the theater or renting one. Also, cook dinner or have drinks at home as opposed to at a restaurant or bar. These little changes will make all the difference in guaranteeing you do not spend your nest egg.

It’s clear that there are many simple strategies in place so you can avoid dipping into your nest egg. If you maintain discipline and financial prudence, you will be sure to have a healthy nest egg for the big occasion you need it for.