Having money set aside for the future and lifes unexpected emergencies is an essential financial strategy. Building a nest egg by allocating a portion of your income to savings or investments will ensure that youre less likely to be caught out without adequate funds. But why should you build a nest egg? We look at five important reasons.
Funding Your Nest Egg
Saving a portion of your income regularly is the easiest way to build up your nest egg. Other options include selling your assets, taking on a second job, and you also have the option to sell your term life insurance policy. Selling your policy may be a good option if you have more than one insurance policy or the life insurance coverage has served its purpose. Many companies now offer life settlements where they will buy your policy for more than its surrender value but less than the net death benefit. There are guides online that will explain how the process works and what kind of return you can expect to receive.
Your Planned Retirement
Most associate building a nest egg with saving for retirement. Very few of us want to work forever and one of the ways to prevent that situation is to build up a stash of money to use as income as we get older. While you may not see the importance of saving for retirement when youre young, the truth is that the younger you are when you start saving, the larger your retirement fund will be thanks to compound interest.
Give You Financial Security
We dont know what the future holds. You may have a fantastic job with a great salary but what would happen if you were suddenly made redundant? What would you do if you needed to find extra money to cover a sudden increase in your household and general bills? Having savings will help you to cope financially if something happens and can make all the difference between just getting by and being able to handle all your financial commitments easily.
Cover Emergencies
Financial emergencies happen and while we dont know when they might happen, we can plan for them. Build up a small nest egg in a separate account so that if your car needs replacing, you receive an unexpected bill, or you have to pay for medical care, you wont have to go into debt to cover it.
Cope if Youre Forced to Retire Early
None of us knows how life will pan out. While we may see ourselves working until were in our 50s or 60s, we may find ourselves in a situation where were unable to work much sooner than wed planned. This may be due to a medical issue, having to take care of sick parents or being made redundant. Having a nest egg to fall back on will be a great comfort should this happen to you.
Education for Your Children
Getting a college education costs money a lot of it. Many parents choose to save for their childrens college fund to offset the costs. If youre already saving for your retirement and can afford it, putting money aside into a college fund will put your children in a better financial position when they graduate.
