The idea of the “nest egg” is a worldwide phenomenon, traditionally drilled into school children and school leavers by parents or guardians determined to paint the picture that saving the funds to move out and become independent as quickly as possible is highly desirable. Basically, there’s plans to turn your bedroom into a home cinema the moment you can pay your own way so hurry up and sort yourself out. Lovely.
The only problem facing us in relation to the time-honoured trials and tribulations of the nest egg is that, by its very nature, the egg must hatch. Usually, what breaks through the shell is the deposit on a mortgage. Or sometimes the money could go towards education or a business plan. Whatever the scenario, savings to get us set up in life can only be spent once (see budget calculator UK for extra help). But what about retirement? Don’t we owe it to ourselves to plan for the journey back down the other side of the mountain? Let’s look at how you could kickstart your retirement fund.
It’s not too early or too late to start saving
There’s this wonderful thing called compound interest. No matter when you start saving, compound interest can boost your savings – although obviously that boost is much greater where you begin to save earlier. Compound interest is essentially interest on interest. Without going into the maths and turning this blog into a spreadsheet of numbers and scenarios, a savings account will add interest to your savings. Once done, the new total becomes the amount to which new interest will be added. Of course, by this point, you’ll have added more money to the total, too. And so it goes. Don’t miss out – make compound interest work for you.
Automated savings by the week
You are more likely to save more towards your pension if you automate your savings to be taken from your bank account on a weekly basis as opposed to the more usual monthly basis. Why? Who knows. There’s really no reason for it. But saving a huge monthly amount scares us. It’s as if we’ll spend our monthly budget too early. And when you put it like that, some sense in the madness begins to emerge. Switching to weekly payments that are individually lower but are cumulatively greater than the comfortable monthly amount is a great way to boost your savings balance.
Save half of your raise
Everybody loves to receive a raise at work. Not only does it mean that our efforts have been recognised, giving affirmation to our career projection, but there’s extra money to spend each month. A top tip here is to “pretend” you only received half of the raise that you actually received, still giving you a boost in your monthly pay packet, but also allowing you to save a much larger amount of money. Having survived for as much as a year or two on your wage before your raise, saving half of the raise should not be too difficult.