How to build a golden egg

Why you need a golden egg

Did you know that 38% of people, who have a saving account report being happy, compared to only 29% of people without a savings account? Why is there a difference in happiness between those who have savings and those that don’t?

Turns out, having a savings account whether it is $2,000 or $50,000 gives you:

  • Peace of mind
  • Feeling of pride
  • Feeling independence

If you feel that you could use a boost in any one of the three points mentioned above, then consider building up your golden egg.

Apart from savings, your golden egg can also, among other uses, be used to:

  • finally start a business
  • secure a down payment for a home

How do you build your Golden Egg?

You’re Richer than You Look

The key to building a golden egg is to live on less than you earn. Creating a budget and adhering to it will allow you to quickly reach your goals. Saving a few dollars per month adds up quickly and you’ll find yourself with some extra cash in the bank. Consider the scenarios below:


Table 1: Savings percentages

Assuming that Persons A and B are healthy, and aren’t in any financial stress, they are free to spend their money as they wish. From table 1, we can see that despite making the same amount of money, Person A is substantially more secure in comparison with Person B, based on their yearly savings. Person A is more likely to sustain their current lifestyle even during times of financial stress, since their savings are enough to cover their expenses for a sizeable amount of time, probably long enough for them to get back on their feet again.

Person B on the other hand, is living slightly on the edge. Any major turbulent life events may throw them off course at least in comparison with Person A.

D is for Discipline

You are what you repeatedly do. Excellence is not an act, but a habit. Building discipline is the only way to make any habit stick. Remind yourself every day, why you’re working so hard and that life will reward your patience and mindful spending.

Here is how to create a budget that allows for savings:

  1. Look at your bank statements from a previous month and identify the bare necessities:


Table 2: Bare necessities

When calculating your bare necessities, ask yourself: are these all really necessities? Can I make any changes? ($1,000 apartment vs. $1,500 apartment).

  1. Next, calculate any extras (how you categorize them isn’t as important as making sure they are all accounted for) and ask yourself if they can be scaled down::

Table 3

Table 3: Extra Expenditures

    1. If you earn $3,000 a month and are spending according to the examples above, your expenses might look something like this:


Table 4: Savings comparison

Scenario 1 represents your usual spending, while scenario 2 represents your spending with the extras scaled down. In a year, scenario 1 would save you $6,600 whereas scenario 2 would save you $10,200.

Depending on what your golden egg amount is (which can vary from 3 months of living expenses to a year or more of living expenses), you’ll reach your goals much faster in scenario B.

Many people live under the impression that having a sound budget implies pain and suffering and not being able to live life comfortably. This simply isn’t true. You are in control, so you can decide what lifestyle you’re comfortable with. You will be the one to decide how fast you would like to reach your goals and what you’re willing to sacrifice to get there.

No touchy Emergency Money

Once your savings reach a sizeable amount, it can be tempting to use it instead of keeping it untouched. Remember the purpose of your fund and stay diligent in keeping away from spending it.

*Once you know how much you want to put away and how often; you may want to look into setting up pre-authorized transfers to your savings account. Most banks offer similar services and it is a hassle-free way of ensuring you meet your savings target.

 Continuous Assessment

Monitor your progress and financials on a regular basis and make adjustments as you see fit. Save more if you feel that your spending habits are getting out of control and save less if you feel you are continuously denying yourself the occasional meal out, travelling etc.

What do you do next?

Once your golden egg is fully formed and you’re satisfied with all aspects of it, you tuck it away, forget it exists and move on with your life. Use the confidence gained from the safety net of your golden egg to focus on new goals and start planning to work on your other ideas.

Do you keep a savings account? How do you stay motivated to avoid dipping into it? Let me know in the comments below 🙂


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One Comment, RSS

  1. Razi July 12, 2016 @ 12:45

    I like the ‘feeling independence’ than the rest.

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