The Importance of Building a Nest Egg
March 14, 2012
By George Tanaka
Senior Vice President, Retail Specialized Markets Division
Union Bank, N.A.
Whether they would like to set money aside for a down payment on a home, build an emergency fund or save for retirement, many of our clients are interested in ways to save and create a nest egg for the future.
Financial advisors agree that saving should be a part of every household budget. Unfortunately, many Americans aren’t prepared for financial emergencies and are not saving enough for retirement. Like most skills, saving money gets easier with commitment and practice. Just as an artist hones his skill to master an art, consumers can develop their skills and creativity to master the art of saving.
By identifying your savings goals, creating a plan and reviewing it periodically to determine if any modifications are needed, you can start on the road to savings. Consider these tips:
- Assess your spending. When creating a savings plan, it is important to make sure you are spending less than you earn. Start by looking at exactly how you spend your money; carefully track your spending for one or more months to see precisely where your money is going. Many people are surprised to see how, for example, the cost of a daily cup of coffee adds up, or the budget effects of regularly dining out. Once you have a handle on how you are actually spending, it may be easier to identify specific areas where you can cut back.
- Open a savings account. Establishing a savings account and contributing to it regularly will help promote savings. Almost all financial institutions allow account holders to set up automatic weekly or monthly funds transfers from their checking to their savings account. This method of saving allows savings to grow, even if you don’t take further action, and helps you approach savings as a “bill” that must be regularly paid.
- Comparison shop. During challenging economic times, retailers may lower their prices and offer bargains to draw additional customers. Consider shopping around for deals on products and services as these bargains could add up to substantial savings.
- Establish an emergency savings fund. Consider opening a savings fund to cover unexpected expenses. Keeping $500 to $1,000 in an emergency fund allows you to pay for unforeseen costs. It also allows you to avoid high-cost, short-term loans, which can create a cycle of debt.
- Diversify. Consider several savings options for your money, such as a regular savings account, CDs and/or money market accounts. Teach family members, including young children, the importance of saving and consider opening a savings account especially for them. Many banks provide savings account options for children and teens.
The foregoing article is intended to provide general information about building a savings and is not considered financial or tax advice from Union Bank. Please consult your financial or tax advisor.
George Tanaka is a senior vice president and head of Retail Specialized Markets division for Union Bank, N.A., a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. The bank operated 414 branches in California, Washington, Oregon, Texas and New York, as well as two international offices, on December 31, 2011. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG, NYSE:MTU), one of the world’s largest financial organizations. Visit www.unionbank.com for more information.