Making Your Savings Decisions

The savings rate measures savings over the period in comparison to disposable income.

Savings Rate Formula

For any given period of time:

$\dfrac{\text{Saving}}{\text{Disposable income}} \times 100\%$

Savings Rate Example

Last month, Alice saved $400, and her disposable income was $2,500.

Calculate Alice's savings rate. Hint: the "/" means divide.

$400 / $2,500 =

($400 / $2,500)  x 100 = 16%

Hint: Divide 400 by 2,500 and then multiply by 100 to get the percent value.

Do you know you can estimate the U.S. personal savings rate?

Around 4.6% in May 2023, which was below a decade-long average of roughly 8.9% (Waters, 2023).

For the latest information, view the Personal Savings Rate [PSAVERT] graph and data from FRED and the U.S. Bureau of Economic Analysis (Research Department, 2023).

Think About It: What is your savings rate for last month? Is it lower or higher than 4.6%? Are you happy with your savings rate?