National Savings
The term “national savings” refers to the total of all private and public savings in a country. Alllll the money socked away for a rainy day.
You get your monthly paycheck. You pay your rent, buy food, shell out cash for your utilities, your internet service, your phone, a few trips to the go-cart track, and...maybe buy your mom flowers for her birthday. At the end of the month, you have $12.17 left. That goes into your savings account: the same starter savings account you first opened when you were twelve. That $12.17 also gets counted in the national savings total. Your $12.17 gets added to the hundreds of millions of dollars Jeff Bezos wired to various Wall Street banking institutions. And all the other money saved by people and companies and governments in the country. All of that dough is totaled to constitute the national savings.
In practice, the national savings figure isn't calculated by adding up everyone's bank accounts. Jeff Bezos’ finances are much more complicated than those in your Junior Savings Account, which still entitles you to a lollipop with every deposit. It might be hard to get a firm grasp on just how much money Bezos has saved to pay for the eventual vacation community on the moon he plans to build with Elon Musk.
Getting honest data on those savings numbers is difficult. Meanwhile, other people are burying cash in mason jars in the back yard in case the zombie apocalypse comes and all the banks shut down. Getting a good estimate on those totals would be difficult, too. So instead of adding up all the savings account totals, national savings is calculated a different way. Instead, the figure is computed by taking the amount of money people earn in a period...and subtracting the amount they spend.
People either spend or save their money. That's the assumption here. What they didn't spend, they must have saved. In terms of an equation: national savings equals disposable personal income minus personal consumption expenditures.
Disposable personal income represents the amount left over in people's paychecks after they pay their taxes. The amount they have available to spend, or save. Meanwhile, personal consumption expenditures represent the spending total. The difference between the two...is what's been saved.
When comparing countries, national savings is given as a rate. Big countries will always have a big total for savings. But it doesn't mean they’re good at saving. So to compare, you need to compute a rate. For that, you take the amount saved and calculate the ratio of that number with the country's GDP. That figure gives you the national savings rate. Some countries save a lot. Others...save very little.
On one end of the spectrum, you've got Singapore. It had a national savings rate of 46.5% of GDP in 2017. Close to half of all the money earned in the country went into savings. On the other end, you've got Greece. Savings rate of 10.9% in 2017. A little over 10% of the money earned there got saved, meaning just under 90% got spent as soon as it arrived.
The United States is closer to Greece on the list. It's gross national savings rate totaled 17.5% in 2017.
Before you start yelling at your family at the next Thanksgiving about how they need to save more...the low savings rate is largely the government's fault. National savings includes government figures as well. Part of the issue for the U.S. is that the federal government runs a heavy deficit. Which eats into the overall savings rate for the country. The federal government ran a deficit of $665 billion in 2017.
It would take an awful lot of $12.17 deposits into your Junior Savings Account to cancel it out.