Types of savings


Savings is the difference between income and expenses of a person or entity. Depending on who makes the savings or the objective pursued, different types can be distinguished.

The classification between the different types of savings can be diverse. We can distinguish various types of classification between one and the other savings. However, we will focus on the two most important classifications.

Types of savings depending on the saver

In economics, there are two main entities. On the one hand there is the private sector and on the other the public sector. The types of savings depending on the saver are:

  • Public savings: It is the one that is made by the State. The State has some income (mainly taxes) and some expenses (public spending). The difference between public income and public spending is what is known as public savings.
  • Private savings: It is the one made by families, companies and other entities. Companies generate income from their activity and have inherent expenses (in addition to taxes). The same goes for families. Families earn wages for working and have living expenses (house, food, loans). Consequently, the difference between what they earn and what they spend (after taxes) constitutes private savings.
  • Gross national savings (ANB): The variable that unites the two previous types of savings is national savings. National saving refers to the total saving that takes place in a nation during a period. It takes into account both private and public savings.

It is important to take into account the difference between savings and accumulated savings. Although it may seem like an insignificant detail, it is. Although during one or several periods the saving is negative, it is worth noting what the total accumulated saving is.

For example, we may spend more than we have for two periods. We would not be saving, but we are not getting into debt either. This expense above our income is possible thanks to our accumulated savings.

Types of savings depending on the objective

Another possible classification of savings is according to the type of objective. The objectives that we will name below can be pursued by both private and public entities. The types of savings depending on the objective are:

  • Emergency savings: It is that part of our savings that we will dedicate in an emergency. A priori, it must be money that we should not count on. The emergency savings should be an amount of money such that we can meet our obligations for a period of time if we stop receiving income. For example, an amount that allows us to live without working for 6 months.
  • Savings for retirement: It is the savings that, usually, increases each year dedicated to our retirement. Although many countries have pension systems based on taxes paid throughout working life, many people prefer to be far-sighted. That is, saving a small part each month so that when they retire they have a considerable sum that allows them to live better.
  • Savings for children: One of the most common savings is that dedicated to children. This saving can be both before having a child (money necessary for their childhood) or during their growth (for their studies). Education is expensive and if it is not planned well (unless you receive help from the state) it is difficult to access university studies.
  • Saving with a defined objective: Within the savings with a defined objective there are many possibilities. We have created this point, not to add a type of saving for each of the parts that surely need it. For example, to buy a house, a car, go on a trip, health. Depending on the specific objective that we have, it is advisable to save a part of our money before entering into the purchase of goods such as a house or a car.

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