Savings Rate

Posted in Finance, Accounting and Economics Terms, Total Reads: 687

Definition: Savings Rate

Savings Rate is the percentage of money one saves from his/her personal income. It is the percentage of money left over after fulfilling all the personal expenditures. It is a rate of money earned which one saves for securing his future life and meeting all the unexpected expenses which may arise in future.

The motives for savings varies from person to person which may be

Securing post retirement life

Meeting emergency expenses in future

Investment in secure financial instruments such as bank deposits, government bonds, postal deposits, pension funds, life insurance policies.

As the savings rate term goes for an individual in the same manner “National savings rate” determines how much percentage of GDP of a country goes towards savings or how much amount of people of any country goes towards savings after excluding all their expenditures. It depicts the culture of that country whether the people of this country are savers or spenders.

India is a country, where majority of people go for savings. As per report given by World Bank, around 30% of GDP of India goes for savings which shows that per 100 INR earned by a person in India 30 INR goes towards his savings.

As of March 2016, Indian banks provides a savings deposit rate of up to 4% to its citizens on deposits.

The government of the country which saves more will have more money to spend on their development and growth related activities and will not have to borrow from outside the country.

Hence, this concludes the definition of Savings Rate along with its overview.

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