How this calculator works
Private saving is the part of private income left after taxes and consumption. In the simplest form, households and firms receive income, pay taxes and spend on consumption, and whatever remains is saved. The detailed form starts from income before net factor payments from abroad and before transfers, then adds foreign factor income, government transfers and interest received on government debt. That broader measure matches the income the private sector has available to spend or save. It is a flow over a period, not a stock of wealth, and it excludes unrealized capital gains and changes in asset prices.
Formula
Private saving = income + net factor payments + transfers + interest - taxes - consumption. In standard mode the middle three terms are omitted, leaving income - taxes - consumption. The saving rate is private saving divided by private disposable income, which is total income minus taxes.
Worked example
With income of $5,000, taxes of $1,200 and consumption of $3,200, private saving is $600 and the saving rate is 15.79% of disposable income. Adding net factor payments of $100, transfers of $500 and interest of $50 under the detailed mode raises saving to $1,250.
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Frequently asked questions
How is private saving different from household saving?
Private saving covers households and private businesses together. Household saving is the household sector alone, and corporate retained earnings are part of private saving but not household saving.
Why add interest on government debt?
That interest is income received by the private sector from the government. Leaving it out would understate private income when the government carries a large debt.
Does private saving equal investment?
Not in an open economy. Private saving plus the government balance plus foreign saving equals domestic investment, so private saving alone need not match investment.