saving

saving

Process of setting aside a portion of current income for future use, or the resources accumulated in this way over a given period of time. Savings may take the form of bank deposits and cash holdings or securities. How much individuals save is affected by their preferences for future over present consumption and their expectations of future income. If individuals consume more than the value of their income, then their saving is negative and they are said to be dissaving. Individual saving may be measured by estimating disposable income and subtracting current consumption expenditures. A measure of business saving is the increase in net worth shown on a balance sheet. Total national saving is measured as the excess of national income over consumption and taxes. Saving is important to economic progress because of its relation to investment: an increase in productive wealth requires that some individuals abstain from consuming their entire income and make their savings available for investment.