Part 2 of 3-Part Series

Age and culture are additional factors which link to the SR, but are oft overlooked. As people age, the SR decreases as they spend more of their savings which they put aside in their younger days. Culture plays a large role shown by a country like Japan having a SR of around 60% while in Canada we save around 15%. Cultures which value consumerism and use it as a show of wealth or status veer towards lower SR’s. Lastly personality matters because some people are very future oriented while others prefer to worry less about the future and spend now.

As you can see, nearly all of the factors above can and do affect one another which all in turn affect the Savings Ratio. It’s why the term socioeconomic was derived and not easily defined because of the vast number of factors which can apply and the complex relationships between them. So, while the SR is extremely simple, the factors are not so much.

So how do these all relate to you specifically? It would be interesting for you to calculate your SR and then relate it to all these factors. Do you have a higher SR because you have a higher income or come from a culture not geared towards consumerism? Or perhaps a lower SR because you like to live in the present, especially while interest rates are extremely low in 2021. Mind you, it must be quite difficult to spend during COVID times, and this is shown by much higher-than-normal savings in Canada. Is that because we see the huge deficit being racked up by the government and know our taxes are going to spike soon?

Phew! That’s a lot of questions that lead to more and questions, and that’s the beauty of socioeconomics and how they relate to you and your SR. It’s not black and white, but did your SR follow the factors listed above for the same reasons? Ultimately you don’t need to know all the reasons and factors that can possibly affect you saving, but it is important to know that actual Savings Rate and if you’re securing your future while still allowing yourself to enjoy the now. Unless you’re almost entirely future oriented and want to save as much as you can…got ya!

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