#economic #households #income

• Savings occur when a individual or a person saves a fraction of his income for the spending in future

Reasons For Saving Income

• Most of the people decide to sacrifice their current spending, for spending the income in the future. For example people save for a holiday for spending money for their kids in the future for education after retirement

• People may choose to save a proportion of their income in the bank or any other financial institution, they also have pay interest in exchange, banks are the safest option for the storage of your savings

• People may save some of their income for precautionary reasons, sometimes in the future people might face big situations like job loss, unexpected events that might happen on the future, divorces that may steal your property and etc

How Can The Level Of Savings Be Affected

• Age Of A Person -: In many modern economics, individuals in the age of 25 tend to start saving for their future, this means they can get unemployed faster and can live a retired life earlier, when they save more, it would be easy to pay of the student loans but they will have to put a lot of time on saving if they have loans for their health and other matters, it depends on the government that decides to give the time for the individuals to pay off the loans as fast as possible

• Attitude To Saving -: As every person is different, each person have a different attitude of saving, for example in the UK and US people mostly purchase goods and service with the help of credit cards, to buy expensive goods and service they usually take loans, expensive goods like cars, houses and etc. In countries like Japan or Germany the use of credit cards are really low. In countries like China, they are really cautious with money as savings there is considered important. The report for loans taken in UK and US, About 55 % of the cars in US are bought by loans, In the UK, more than 65 % of the rich properties and goods are bought by financial assist

• Consumer And Business Confidence -: If people and firms have the confidence in a economy then they are most likely not to save any kind of income and spend most of the income they earn, savings will only occur when their is a slowdown in the process of economy and people would most likely be less optimistic about the future, this means savings are given more priority than before

• Interest Rates -: A rise in interest rates results to more money being paid to the bank as the loans higher percentage is externally added, these kind of scenarios have higher chances to reduce the level of spending for the individual or a firm, at the same time individuals and firms will concentrate to save more income rather than spending them, they save of the income in the bank to take advantage of a higher return, when interest rates are low, people are more likely to have a disincentive to save income

• Income Levels -: In general, the more the person earns, the more the savings would be more, this is because the wealthy individual has the power to spend a higher proportion on savings

Savings In China

• Gross Savings -: Gross savings is the countries income that is being used on savings of an income that is not being consumed, gross savings are used for the help of the country

• In China the level of gross savings is proportional to the GDP of the country which is close to 50 %

• House hold incomes have increase drastically due to the unbelievable growth in the Chinese economy in the last few decades, avg house hold in the Chinese economy have double the economy they earn in just 7 years

• The one-child policy, which was in place from 1979 until 2015, reduced family size and therefore the level of household spending (and hence encouraged higher levels of saving).