What is Savings Ratio

Thank you for your kind reply. I would like to clarify one more question. Savings ratio = Net surplus/Monthly income.
if the savings ratio is 25%. does it mean that the person must save 25% of his monthly income? and the person is already saving x amount from his income, where does it reflect in the savings ratio?
I am confused with this so please help me in understanding this also.

1 Answer(s)


Say iam earning Rs.100 every month and save Rs.30 which means my savings ratio is 30/100 or 30%

More I save more will be my ratio meaning I have more money to invest for the future. Ideally savings ratio should be 25 to 30% for any family.