Private Savings Calculator
Enter total income, taxes and consumption to see private savings, the income left after taxes and spending.
Updated
Private Savings Calculator
Our Private Savings Calculator works out how much income is left once taxes have been paid and consumption has been covered. Type the total income, the taxes and the consumption for one period. It returns private savings along with disposable income, the saving rate and the share of total income that is saved. It suits macroeconomics students working with the saving identity, households checking how much they really put aside and analysts comparing saving between years or groups.
Quick answer
Private savings are total income − taxes − consumption: with an income of 80,000, taxes of 16,000 and consumption of 52,000, 80,000 − 16,000 − 52,000 = 12,000.
- Total income (Y): wages, business income, interest, dividends and rent before tax.
- Taxes (T): taxes paid to the government, net of any benefits received.
- Consumption (C): spending on goods and services in the same period.
- Saving rate: private savings ÷ disposable income × 100. Here it is 18.75%.
What Are Private Savings?
Private savings are the part of income that households and firms neither pay to the government in taxes nor spend on consumption. Economics textbooks usually call it private saving and write it as S. It is a flow, measured over a month, a quarter or a year, and not a stock of wealth.
The figure matters at two levels. For a household it is the money available for an emergency fund, retirement or investment. For a whole economy it is the main pool of funds that pays for business investment and covers government borrowing.
Private Savings Formula
- S: private savings.
- Y: total income.
- T: taxes paid to the government.
- C: consumption.
Income minus taxes is disposable income, so the formula can also be read in two steps:
S = disposable income − C
When government transfers such as pensions and benefits are part of the question, T stands for net taxes, which are taxes minus transfers. The full version is then:
To use it here, subtract the transfers from the taxes first and type the difference in the Taxes field. A household with 16,000 of taxes and 4,000 of benefits enters 12,000, which lifts the result in the main example from 12,000 to 16,000.
How to Calculate Private Savings
A household earns 80,000 in a year, pays 16,000 in taxes and spends 52,000 on consumption:
= 12,000
- Start with total income. 80,000.
- Subtract taxes. 80,000 − 16,000 = 64,000. This is disposable income.
- Subtract consumption. 64,000 − 52,000 = 12,000.
Private savings are 12,000. That is 18.75% of disposable income and 15% of total income.
Where the Income Goes
The bar is drawn to scale. Taxes take 20% of the income, consumption takes 65% and the dark block at the end, 15%, is private savings. Because savings are a remainder, they change one for one whenever any of the other three figures changes.
What Counts as Income, Taxes and Consumption
| Item | Enter as |
|---|---|
| Wages, salaries, bonuses | Income |
| Profit, rent, interest | Income |
| Income and payroll taxes | Taxes |
| Benefits received | Take off taxes |
| Housing, food and bills | Consumption |
| Interest paid on loans | Consumption |
| Money put into savings | Leave out |
| Loan principal repaid | Leave out |
Money put into a savings account, a pension or shares is not spending, so it stays out of consumption and shows up in the result. Paying down loan principal is treated the same way, because it lowers what is owed. Use the same period for all three figures.
Private Savings Examples
A two-income household. Annual income of 175,000, taxes of 22,000 and consumption of 88,000:
= 65,000
Disposable income is 153,000, so the saving rate is about 42.48%.
A single professional. Income of 60,000, taxes of 10,000 and consumption of 40,000:
= 10,000
That is 20% of the disposable income of 50,000, or about 16.67% of total income.
A small business owner. Income of 120,000, taxes of 30,000 and consumption of 75,000:
= 15,000
The saving rate is about 16.67% of disposable income, or 12.5% of total income.
Spending more than is left. Income of 30,000, taxes of 3,000 and consumption of 29,500:
= −2,500
The result is negative. The household spent 2,500 more than its disposable income of 27,000, which is called dissaving.
Private Savings and the Saving Rate
An amount is hard to compare between a large income and a small one, so saving is usually quoted as a rate. The standard rate divides by disposable income:
Some budgeting guides divide by total income instead, which always gives a lower number when taxes are paid. The calculator shows both so the two are not confused.
| Measured against | Main example |
|---|---|
| Disposable income, 64,000 | 18.75% |
| Total income, 80,000 | 15% |
The first figure is the average propensity to save. To see how much of an extra unit of income is saved, use the MPS Calculator.
What Raises or Lowers Private Savings
Starting from the main example, each change below is made on its own:
| Change | Savings |
|---|---|
| Starting point | 12,000 |
| Taxes up by 2,000 | 10,000 |
| Consumption down by 2,000 | 14,000 |
| Income up by 5,000 | 17,000 |
In practice the three rarely move alone. When income rises, people usually spend part of the increase, so savings go up by less than the rise in income. When taxes are cut, part of the cut is spent as well.
Private, Public and National Saving
In macroeconomics private saving is one half of national saving. The other half is public saving, the government budget balance, where G is government purchases:
Public saving = T − G
National saving = Y − C − G
Taxes cancel out when the two halves are added. Take an economy, in billions, with an income of 20,000, taxes of 4,000, consumption of 13,000 and government purchases of 4,500:
= 3,000
Public = 4,000 − 4,500 = −500
National = 3,000 − 500 = 2,500
The government runs a deficit of 500, so part of what the private sector saves is lent to the government and national saving is smaller than private saving.
Where Private Savings Go
Private saving does not sit idle. The saving identity shows the three places it ends up, with I for investment and NX for net exports:
- Investment: lending to firms for buildings, equipment and stock.
- The budget deficit: lending to the government when G is larger than T.
- Net exports: lending to the rest of the world when the country sells more than it buys.
In the economy above, suppose net exports are −200. Then investment is 2,500 + 200 = 2,700, and the identity checks out: 2,700 + 500 − 200 = 3,000. A negative NX means money is flowing in from abroad, which lets investment be larger than national saving.
How to Read the Result
| Result | Meaning |
|---|---|
| Positive | Income covers taxes and spending, with some left over. |
| Zero | Everything earned is taxed or spent. |
| Negative | Dissaving: the gap is met by borrowing or past savings. |
There is no single correct level. It depends on income, living costs, age and goals. A student or a retiree often dissaves for good reasons, while someone in their peak earning years usually saves more.
What the Result Leaves Out
- Wealth. The result is one period of saving. It says nothing about savings built up earlier or about debts.
- Investment returns. A rise in the value of shares or a home is not income here, so it is not counted.
- Prices. The figures are in current money. Adjust for inflation before comparing years.
- Definitions. Statistical agencies treat items such as pension contributions and durable goods in slightly different ways.
To work out the disposable income step on its own, with transfers as a separate field, use the Disposable Income Calculator. The result is for education and planning and is not financial advice.
Key Terms
- Private saving
- Income minus taxes minus consumption.
- Disposable income
- Income minus taxes, before any spending.
- Consumption
- Spending by households on goods and services.
- Saving rate
- Saving as a percentage of disposable income.
- Dissaving
- Spending more than disposable income, so saving is negative.
- Public saving
- Taxes minus government purchases, the budget balance.
- National saving
- Private saving plus public saving.
How to Use the Private Savings Calculator
- Enter total income. Type the income earned in the period before tax, such as 80,000.
- Enter taxes. Type the taxes paid to the government in the same period, such as 16,000. Take off any benefits received first.
- Enter consumption. Type the amount spent on goods and services in the same period, such as 52,000.
- Read and copy the result. Private savings appear as you type, with the working, disposable income, the saving rate and a bar showing how much is spent and saved. Press Copy to copy it, or Clear or Esc to start again.
Example: an income of 60,000 with taxes of 10,000 and consumption of 40,000 gives private savings of 10,000.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate private savings?
Take total income, subtract the taxes paid to the government and then subtract consumption. What is left is private savings.
What is the private savings formula?
Private savings = total income − taxes − consumption, written S = Y − T − C. With government transfers it becomes S = Y − T + TR − C.
What are the private savings on 80,000 with 16,000 of taxes and 52,000 of consumption?
They are 12,000, because 80,000 − 16,000 − 52,000 = 12,000. That is 18.75% of the disposable income of 64,000.
Can private savings be negative?
Yes. When taxes and consumption add up to more than income, the result is negative. This is called dissaving and it is paid for by borrowing or by drawing on past savings.
Do private savings include money put into investments?
Yes. Any income that is not taxed and not spent on consumption counts, whether it sits in a bank account, a pension or shares.
Are loan repayments consumption or saving?
Interest paid on a loan is usually treated as spending. Repaying the principal reduces debt, so it is treated as saving and is left out of consumption.
What is the difference between private and public saving?
Private saving is what households and firms keep after taxes and consumption. Public saving is what the government keeps, taxes minus government purchases. Together they make national saving.
Are private savings the same as the saving rate?
No. Private savings are an amount of money. The saving rate is that amount as a percentage of disposable income, which makes it easier to compare people or years.
Is the Private Savings Calculator free?
Yes. It is free to use, with no sign-up and no limit on how many times you use it.
Sources
- Wikipedia. National saving.
- Wikipedia. Saving identity.
- OpenStax. Principles of Macroeconomics 3e, 18.1 How Government Borrowing Affects Investment and the Trade Balance.
- OpenStax. Principles of Macroeconomics 3e, 10.4 The National Saving and Investment Identity.
- U.S. Bureau of Economic Analysis. Glossary: Personal saving.
- U.S. Bureau of Economic Analysis. Personal Saving Rate.
- Wikipedia. Average propensity to save.
- Wikipedia. Dissaving.
Try our Private Savings Calculator to see how much income is left after taxes and spending in a couple of seconds.