Savings - Financial definition

In economics and finance, savings represent the portion of income that individuals, businesses, or governments withhold from immediate consumption. These funds are often reserved for future needs, such as emergencies, retirement, or investments. Savings play a crucial role in economic growth by providing capital for investment in productive activities, such as infrastructure development or business expansion.

Additionally, savings contribute to financial stability on both individual and societal levels, serving as a buffer against unexpected expenses or economic downturns. In financial markets, savings are channeled into various instruments such as savings accounts, certificates of deposit (CDs), stocks, bonds, and retirement accounts, each offering different levels of risk and return. Encouraging savings through policies and incentives is a common strategy for promoting long-term financial security and economic stability.