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Nest Egg: The Reserve of The Conscientious

The nest egg is an issue that we inevitably encounter, especially at the beginning, when we deal with personal finances. The question is always: How high should it be? Is it necessary at all? If so, how should it be invested? I have looked at what others write about it and add my mustard.

You have just little time for the whole article? At the end you will find a summary (TL;DR).


How high should the nest egg be?

I have researched and written down, which opinion is represented in the WWW. The table below came out. The amount of the emergency pension reflects also the “recommendations” and not only the actually indicated amount of the individual persons; Here I assumed that someone who e.g. recommends 3 monthly salaries also saves 3 monthly salaries for the emergency pension. The table is unordered and can only be seen as a list, which statements I found to the Notgroschen.

Amount of the emergency pension

No nest egg
2-5 Salaries
3 Salaries
3 Salaries
3 Salaries
3-6 Salaries
6 Salaries
Orientation towards issues
personal situation
Worst Case Scenario
8 Salaries
1 Salary
6 Monthly expenses
2 Salaries
personal situation
4 Salaries

What do we recognize?

  • The height of the nest egg is individual.
  • 3 and 3-6 salaries are something like the standard specification.

I found it exciting that often a concrete recommendation was made and less reference was made to the individual situation (I think I also wrote this somewhere; I like the idea behind it at the beginning of my “savings career”, because it is perhaps not clear yet how high the expenses per month are).

The orientation on the monthly expenses was not often represented with this research – nevertheless, exactly the monthly expenses are rather the decisive one. The personal situation is also mentioned a few times – that can mean a lot. Is it again the monthly expenses, the economic situation or something else? And then there is the worst-case scenario. Also an exciting approach.

Let’s take a closer look at the data.

X Monthly salaries of nest eggs

The indication of net monthly salaries is very popular. This is easy, but very rough. Because, if Hansi can put 1,400 € on the side and Susi has 2,400 €, but Hansi 1,200 € at expenditures, that is suboptimal temporally. With 3 monthly salaries that would be a margin of 3,000 € for one month, but only 600 € for three months. If an unforeseen payment would come into the house, then it would be already scarce. So it depends on what situation occurs. Is it unemployment, a minor but necessary treatment at the doctor of choice or an accident?

The nest egg for all cases

It is difficult to know that at the moment because we cannot see into the future…but at least forecasts are possible. We will come back to that once again.

Is the “monthly salary” recommendation therefore sensible? I believe that it is a simple guideline, especially at the beginning, to have a goal. Someone who already has a good overview of their finances should rather link the amount with the monthly expenses.

Monthly expenses

The orientation on the monthly expenses is more detailed than the orientation on the monthly salary. Why? It is easier to plan. It is easier to plan. Imagine you have the following choice:

Cover your expenses with a monthly salary of 1,500 €.
Cover your expenses of 700€ per month with 1.500 €.
or mathematically:

x = 1.500 – y
0 = 1.500 – 1.500

We see immediately: Something is missing in the first equation. First, it is the expenses, second, the amount that remains.

So the monthly expenses minimize the risk of not being able to pay anymore. Of course, there is also a point of criticism here: the monthly expenses do not include the unforeseen expenses. These could be added with an amount of Z. In principle the “personal situation” also falls here under it, because with the monthly expenditures it becomes very personal.

In the simplest case we take the monthly expenses times 3 and can cover our costs for 3 months. How much we actually set aside is again individual.

Worst Case Scenario

In my opinion, this is a continuation of the monthly editions. This is very analytical now, but we could imagine the following:

We evaluate with what subjective probability a worst case occurs. Worst Case = Monthly expenditure is not likely to remain constant. Example: Expectation that larger payments might be due in the future. The health condition can also be evaluated here. In our example we expect a worst case of 30% probability. 3.000*0,3 = 900.

Planned reserve Worst Case (probability: 30%)
3.000 €+900 €

So we add 900 € to our reserve of 3.000 €. In my opinion, this procedure is suitable for a flat-rate and quick procedure, but of course does not take into account the amount of the individual life situation.

Is a nest egg really necessary?

The emergency savings is necessary and sensible. Why? Above all, and this is probably the most likely scenario, if unforeseen payments such as a repair are due. But there are also other cases. For example, I came across the following argument a few days ago

In our society with the respective articles of association one could think that a nest egg is no longer necessary. Why also? Social security, unemployment benefit and other safety nets are available.

But the premise is already wrong. The “but available”, can change faster than one believes. In addition, state aid is not guaranteed and depends on the respective legal situation. In addition, it is irresponsible to give up control in such a way – it sounds, even if I do not find the term meaningful, provocatively expressed after the famous “social hammock”. In addition, the amount might not be able to cover the monthly expenses. With a monthly net income of 1.748,65 ? the requirement on unemployment pay lies with 1.163,74 ? That may be sufficient for some persons nevertheless, for others not at all.

In addition, however, other arguments could also be put forward:

A nest egg is therefore not necessary, because I can deduct it anyway at any time from my investments. I don’t miss a single return.

That is right. But it depends on where the money is invested. On the stock exchange? Maybe also in an ETF that works with artificial intelligence? All well and good, but what about the costs? Is it worth it at all? Well, that depends on when the nest egg is needed. Nevertheless: 7% yield is more than 2% of the overnight money. Here it is to be noted however that straight the Notgroschen should not accompany with a net yield striving. Finally a high net yield holds also a larger risk to diminish the Notgroschen in its height or to lose. Basically, it is a question of the expected return, and the personal assessment of a “nest egg situation”.

Where to put the money?

On a P2P platform, of course! P Ne, seriously: The overnight money is well suited if you want to earn some interest and access the money quickly at the same time. The current account also works, but here you lose the small bonus of the slightly higher interest rate.

My reserves, my security

Who has not noticed it yet: I think that the reserve in the form of a nest egg is necessary. My own reserve is 3,000 €, which is not touched either. I think it makes sense to have a nest egg after expenses. But also the personal life situation (health) and expected expenses should be included. Then fast a daily allowance account put on and ready.


The height of the Notgroschens is an individual affair. With my research the following came out: Very often it is recommended to save between 3-6 monthly salaries or to orient oneself at the monthly expenditures. The monthly salary is a rough value, but just at the beginning to recommend. With the monthly expenses, the notorious fee can be determined more precisely, but in my opinion an additional security amount should be included. In the article I also suggested a worst-case calculation, which can specify this security amount. The nest egg is necessary because we can respond responsibly to unpleasant situations. Finally, it makes sense to place the reserve in an overnight money account in order to collect at least some interest.

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