Private savings

Private savings is the difference between income and consumption of an individual, or group, belonging to the private sphere of the economy, which are usually families or companies.

Formally, this type of saving is the result of subtracting from disposable income, or disposable income, the consumption of goods and services by an agent or private organization. Organizations that can be ordinary individuals, companies or non-profit institutions.

Therefore, the total private savings of a country is considered to be the sum of the savings of all the families and mercantile companies that compose it. These are responsible for containing said private savings. Private saving is the result of making consumption decisions on a reference disposable income. That is, the amount that has been reserved, and has not been used to supply or to achieve different types of service.

The type of saving opposed to private saving, by its nature, is public saving. This is the one carried out by the State. That is, by any type of company or public organization.

Private savings of families and companies

For example, if a family has an annual income of 60,000 euros from the wages of the father and mother, those would be the income available for that period. Let's imagine that the same family spends 55,000 euros to buy food, pay their bills, educate their children and go on vacation in August. The remaining difference of 5,000 euros will be what we will consider as the savings of said family nucleus.

In the case of companies, the saving is equivalent to the profit resulting from the economic activity to which it is engaged and after having distributed the corresponding dividends or distribution of profit shares among the shareholders. Often companies decide to dedicate the savings items with which they are in different purposes, such as undertaking new projects and investments.