What Is a Nest Egg and How Do I Start One?
May 13, 2025
A nest egg is money you save over time to use in the future. It can help you with big goals like buying a house, paying for college, or retiring comfortably.
More than two in five older adults in Central Indiana report experiencing at least some financial difficulty.[1] This includes paying for daily expenses and finding affordable health insurance.
Building a nest egg gives you financial security and peace of mind. In this article, you’ll learn what a nest egg is, how much money you might need, and how to start and grow your own.
Nest Eggs Explained
A nest egg is a sum of money set aside for the future. You can use it for retirement, big purchases, or emergencies. Having a nest egg gives you financial freedom and reduces stress. Unlike an emergency fund, which covers unexpected expenses, a nest egg is meant for planned goals.
You can save your nest egg in different types of accounts, like:
Certificates of Deposit (CDs).
Money Market Accounts (MMAs).
Individual Retirement Accounts (IRAs).
Health Savings Accounts (HSAs).
Savings accounts offer a simple, safe place to keep your money. Meanwhile, CDs offer fixed interest rates over a set time. And, MMAs often provide higher interest rates with more access to funds than CDs. IRAs help you save specifically for retirement, while HSAs are designed for healthcare needs.
The right account, or combination of accounts, is based on your financial goals and how quickly you might need the money.
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How Much Money Do You Need in a Nest Egg?
The amount you need in a nest egg depends on your goals. If you're saving for retirement, aim to save enough to cover 70% to 80% of your yearly income.
So, if you earn $50,000 a year, you might need $1 million to $1.5 million to maintain your lifestyle for 25 to 30 years. This amount might help maintain your lifestyle after you stop working, depending on any other income you might have.
If your goal is not retirement, the size of your nest egg might be smaller.
For example:
You may need 20% of the home’s price as a down payment if you need to save to buy a house.
You might need enough to cover tuition, books, and living costs to save for college expenses.
To start a business, you would need to calculate the startup costs and a cushion for expenses.
The amount you need in your nest egg depends on your life plans.
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Nest Egg Example
Imagine you want to save $50,000 for a down payment on a house in 10 years. If you save $350 each month in a high-interest savings account, CD, or MMA with a 4% interest rate, your savings can grow significantly over time. Unlike keeping your money in a regular checking account, these options help your money grow faster.
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How To Start Your Nest Egg
Starting a nest egg might seem challenging, but it’s doable with the right steps.
Here’s what you can do:
Set a goal. Decide what you’re saving for and how much you need.
Make a budget. Write down your income and expenses. Find ways to cut costs and save more. To make informed decisions, use our savings goal calculator.
Open a deposit account. Choose an account that offers good interest rates. To see what Centier offers, explore our savings products.
Start small. Even saving $20 a week can add up over time.
Automate your savings. Set up automatic transfers from your checking to your savings account. If you’re looking for a completely automated way to save, consider a Round-Up Savings account.
To see how your fund is growing, monitor your accounts over time. Make adjustments to your savings plan as needed.
A good strategy might be to "pay yourself first." Before spending money on other things, put a portion of your income into your nest egg. This habit can help you build your savings without even thinking about it.
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How To Build and Maintain Your Nest Egg
Once you start saving, the next step is to build and maintain your nest egg. Here are some practical tips.
1. Save Consistently
Make saving a regular habit. Even if it’s a small amount, consistency is key. Over time, small amounts add up to big savings.
2. Increase Savings When Possible
Whenever you get a raise or a bonus, put some of that money into your nest egg. For example, if you get a $1,000 bonus, you might try to save at least $500 of it.
3. Explore Different Savings Options
Consider putting some of your savings into various deposit accounts, like CDs or MMAs.
CDs are good for long-term savings. They often offer higher interest rates than regular savings accounts, especially if you can leave your money untouched for a set period.
MMAs typically offer higher interest rates than traditional savings accounts and may come with check-writing options.
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4. Avoid Dipping Into Your Nest Egg
If possible, do not use your nest egg for everyday expenses. It’s tempting, but remember, this money is for your future. If you need extra funds, look for other solutions like cutting expenses or boosting income.
5. Review and Adjust Your Savings Plan
Regularly check your savings progress. Make sure you are still on track to meet your goal. If your financial situation changes, adjust your plan as needed.
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Start Your Nest Egg Today With Centier by Your Side
A nest egg is an important part of your financial plan. Whether you are saving for retirement, a home, or another big goal, starting early and saving regulary can make a big difference. By setting clear goals, choosing the right accounts, and maintaining consistent savings habits, you can build a strong financial future.
If you’re ready to start or grow your nest egg with Centier Bank, explore our helpful financial calculators.
Source:
[1] https://centralindiana.stateofaging.org/financial-stability-2023/
