The tale is set in a forest and begins with "once upon a time". Timmy Tiptoes is "a little fat comfortable grey squirrel" living in a nest thatched with leaves in the top of a tall tree with his little wife, Goody. Over the course of several days, the two collect nuts in their little sacks for the coming winter and spring, and store the nuts in hollow tree stumps near their home. Timmy wears a red jacket he removes while working, and his wife wears a pink dress and apron. When the stumps are full, the couple make use of a tree-hole that once belonged to a woodpecker. The nuts rattle "down – down – down inside", and Goody wonders how they will ever retrieve them. Timmy reminds her he will be much thinner by springtime and will be able to pass through the little hole.