The 10 Countries Where People Save the Most Money
When it comes to saving, behavior varies widely among nations. Residents of the United States only save 5.8%. But the residents of 10 countries save more than 9% of their disposable incomes. Economists are uncertain why these countries residents save so much more than others. 24/7 Wall St. has analyzed the 10 countries to try to gain insight into the matter.
We reviewed personal savings rate statistics for member countries of the Organization of Economic Cooperation and Development. This information was then compared to the individual tax rate, unemployment rate and actual disposable income, along with the debt and total deficit, for each country.
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One factor that could affect the saving rate is a countrys tax rate. The higher the governments deductions, the less money residents have to spend. Therefore, a significant savings rate in countries with a high tax rates would cause people to have little or no discretionary income. This is indeed true in the case of Portugal and Spain, which have among the lowest tax rates, standing below 20%, and whose residents save among the most. But its not always the case. Belgium, for example, has the highest tax rate among the OECD nations, yet its residents still save more than most other countries.
Another reason savings rates vary from country to country may have to do with the fixed cost of living. Americans pay almost $4 a gallon for gas. In some countries, gasoline costs twice that much. People who need to drive a great deal in nations with high energy costs have less to save.
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The reasons that people save or dont save could go on and on. 24/7 Wall St. sought to identify relationships between income and the ability to save. While one might think that high income makes saving more likely; this is not the case. It may be that where people make the most money, the costs of goods and services are proportionately high. It also appears that there is no ready relationship between savings rate and other major economic factors in the countries where people save the most. See for yourselves and let us know what you think.
These are the 10 countries where people save the most money:
10. Austria > Pct. savings: 9.1% > Unemployment: 4.4% > Disposable income: $27,670 > Debt as a % of GDP: 78.6% > Pct. earnings paid to taxes: 32.7% Austrians pay a total 32.7% of their wealth in a combination of income tax and social security. Despite this, the country has the third highest disposable income among OECD countries. Simply put, Austrians have a lot of money. This is due, in part, to the fact that a relatively large number of Austrians work longer hours than average. After paying taxes, Austrians put 9.1% of their earnings into savings.
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9. Australia > Pct. savings: 9.3% > Unemployment: 5.2% > Disposable income: $27,039 > Debt as a % of GDP: 25.3% > Pct. earnings paid to taxes: 22% Australia was one of the few economies to exit the global financial crisis relatively unscathed. The resource-rich country has benefited from rising energy and commodity prices. Unemployment in Australia is low and household income is quite high. The government collects no social security tax, and residents spend just 22% of their gross income on taxes. While Australians work longer hours than most, they also spend very little time on personal care and leisure. The additional time Australians spend at work and the little time and money they spend on self-indulgence resulted in a savings rate of 9.3% in 2010.
8. Portugal > Pct. savings: 9.8% > Unemployment: 12% > Disposable income: $18,540 > Debt as a % of GDP: 103.1% > Pct. earnings paid to taxes: 22.3% Residents of Portugal save almost 10% of their disposable income. Given the countrys challenged economic condition, this is almost certainly a good idea. In 2010, the country had an unemployment rate of 12%. That same year, the governments debt was 103.1% of GDP. The average Portuguese worker earns less than $25,000 per year. The relatively low wage may be a function of the countrys low level of educational attainment. Only 28.25% of Portuguese citizens ages 25 to 54 have a high school diploma or higher the lowest rate in the OECD.
7. Switzerland > Pct. savings: 10.1% > Unemployment: 4.2% > Disposable income: $27,542 > Debt as a % of GDP: 40.2% > Pct. earnings paid to taxes: 21.5% The Swiss are notorious both for their and wealth and their thriftiness. In 2008, the average disposable income was in the top five highest in the OECD. This is largely because Switzerland has the highest household wealth in the developed world and an income tax rate in the bottom third among OECD nations. Like its citizens, Switzerland was one of only two OECD nations (along with Norway) to have a budget surplus, and government debt as a percentage of GDP is one of the lowest in the world.
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6. Sweden > Pct. savings: 10.8% > Unemployment: 8.4% > Disposable income: $26,543 > Debt as a % of GDP: 45.4% > Pct. earnings paid to taxes: 25.3% Swedes save a large portion of their earnings. Government debt is less than 50% of GDP, and in 2010 the countrys deficit was a mere 0.3% of GDP. The Swedish are highly educated, and their system is working well. The country is tied with Norway for having the lowest percentage of people working long hours in the OECD, a mere 0.01%.
5. Germany > Pct. savings: 11.4% > Unemployment: 7.1% > Disposable income: $27,665 > Debt as a % of GDP: 87% > Pct. earnings paid to taxes: 41.3% In 2009, the average German earned $47,882 before taxes. This was more than all but a handful of wealthy central and northern European nations. However, the country also has the second-highest tax rate in the OECD, behind Belgium. Despite paying more than 40% of their income on taxes and social security payments, residents average disposable income is still nearly $28,000. The average resident spends more than 16 hours each week on leisure and personal care. Despite the time spent, Germans still save 11.4% of their disposable income.
4. Belgium > Pct. savings: 12.2% > Unemployment: 8.3% > Disposable income: $26,008 > Debt as a % of GDP: 100.7% > Pct. earnings paid to taxes: 41.5% The average Belgian devotes 16.61 hours per week to leisure quite high among OECD countries. Residents of Belgium have an above average income, although a large percentage of this goes to taxes. Belgians total payments to the government in the form of income tax and social security contributions is 41.5% of their total wage earnings, the highest rate among all OECD nations. Of what is left over, Belgians save 12.2%.
3. Spain > Pct. savings: 13.1% > Unemployment: 20.1% > Disposable income: $22,972 > Debt as a % of GDP: 66.1% > Pct. earnings paid to taxes: 19.7% Unlike many of the nations on this list, Spains economy is in terrible shape. The unemployment rate of more than 20% is by far the highest in the OECD. In 2010, the governments deficit was 9.2% of GDP, an improvement from 2009s 11.1%. In that year, possibly in response to the troubled economy, the nations residents saved 18% of their income, the most among developed nations. As conditions worsened (unemployment hit 21% in June) the amount Spaniards have been able to save has dropped. Despite relatively low gross income and poor economic conditions, residents do benefit from a tax rate of less than 20%.
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2. France > Pct. savings: 16% > Unemployment: 9.8% > Disposable income: $27,508 > Debt as a % of GDP: 94.1% > Pct. earnings paid to taxes: 27.7% The rate of saving among the French has increased over the past five years, although it has been relatively high for quite some time. This is probably a good thing given that the country underwent a slew of negative effects following the global recession. In 2009, the countrys GDP contracted 2.5%. From 2009 to 2010, the unemployment rate increased from 7.4% to 9.5%. The governments aggressive actions in trying to fight the effects of the recession are contributing to a deterioration of Frances public finances, according to the CIA World Factbook.
1. Ireland > Pct. savings: 19.3% > Unemployment: 13.7% > Disposable income: $24,313 > Debt as a % of GDP: 102.4% > Pct. earnings paid to taxes: 20.9% Ireland was once the healthiest and fastest growing economy in Europe. That changed during the recession. In 2006, the Irish government had a budget surplus of 2.9% of GDP. In 2010, it accrued a staggering deficit of 32.4% of GDP. As the countrys debt grew and record unemployment was reached, citizens began saving a much higher portion of their disposable income. Despite having generally low household wealth, Irelands tax rate of just over 20% is one of the lowest in the OECD.