The Importance Of Household Saving

Mentioning regarding of saving which are essential for economics unit like household government and firm. Sonuga-Barke and Webley (1993) argue that saving is defined in terms of the quality of a set of actions (going to the counter and depositing money), made in relation to one or other institutions (bank or building society) (Furnham, 1999). Here, we will be focusing more on household saving. Over so many decades pass, many developing countries had increased their saving which has been related to the income that is received by household. As we have known, household make saving is to basically achieve their financial goal. It is either to own and buy a house, new car, or for retirement purposes. Those goals can be achieved by saving money

The increase of household income will boost household saving which can contribute to national saving. (Kraay, 2000)

“BoŜena Frączek” (2011)

Income is the most crucial element that had been the main determinant for household to save. It identify the relationship between household saving and their main determinants. It is also identify relationship between saving and economic growth. The result found that, factor and impact on household saving can be vary in many countries, where else the relationship between saving and economic growth are having differences. (Frączek, 2011)

“Charles Yuji Horioka & Junmin Wan” (2007)

It is an analysis of the determinants of the household saving rate using a life cycle model. Findings that household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate. (Wan,

Female or women in the household are more depend on their spouse in savings because they are scarce in term of income. (Brad, 2012)

3. Educational status: Next factor that determine household saving are educational status. Individual with financial education are tend to save more rather that individual that are not having enough information regarding financial matter especially on saving. Education can be a powerful tools in encourage people to save more. (Robert, 2013)

4. Wealth.

Simone Salotti (2008) mention that people’s saving is often tied up in assets, such as houses. The housing market has a big impact on saving in the UK. Rising house prices encourage equity withdrawal and higher spending. Falling house prices have the opposite effect. (Simone, 2008) Falling house prices also can be a factor that can influence saving rating to increase because less price to be paid for the house purchasing and have enough balance of cash to be save. This factors will reduce spending and encourage saving.

5. Rate of Return

Household saving tends to increase during a higher interest rate because higher interest rate means a higher return rate after a period of