# What is "personal savings"? **URL:** \ **Category:** Factual Questions\ **Created:** [March 18, 2014, 11:00pm UTC](https://boards.straightdope.com/t/what-is-personal-savings/684035 "2014-03-18T23:00:10Z")\ **Posts on this page:** 1\ **Showing post:** 30
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [March 22, 2014, 10:48pm UTC](https://boards.straightdope.com/t/what-is-personal-savings/684035/30 "2014-03-22T22:48:05Z")
> [@Caldazar](#): > > No, personal saving is not the difference between income and spending plus investments. Personal saving is the difference between **disposable income** and **outlays**. Income is not a synonym for disposable income. Spending is not a synonym for outlays, unless you choose to define spending in precisely the same manner as personal outlay is defined. You’re trying to substitute common words, or the common, everyday definitions of words, for words that are being used in a specific economic context with their specific economic definitions. Well, I think it’s fairer to say that I’m using the dictionary definition of words, in a situation where the BEA is using its own special definitions, without saying so, or saying what they are. **Disposable income** , to my understanding, is income after taxes. If it has a different definition, I’m happy to learn what it is. **Outlays** I’m not so clear about. I’ve already cited it’s dictionary definition (“an amount of money spent on something”), but from this thread I’ve gleaned that the BEA uses the word to mean (mostly) money spent on consumption, rather than investment. However, that doesn’t help much, because they also appear to have their own definitions of “consumption” and “investment”. For example, buying stocks is not considered “investment,” and buying a home is considered “investment,” but only if no one has lived there before. Anyway, I don’t necessarily disagree with what the BEA (or other economists) are doing. But I do think if you use words that are different from, or the opposite of, their ordinary meaning, you should probably expect a certain amount of confusion. > [@](#): > > Spending personal cash to purchase a stock is an expediture, yes. You lose personal cash and gain personal ownership of the shares of stock. Spending personal cash to purchase a stock is not an outlay, because the BEA chooses to define outlay in a specific manner. You cannot equate “spending” with “outlay”. The word “spending” appears only once in this month’s Personal Incomes and Outlays News Release, and it is used as synonym for Personal Consumption Expenditures, not Outlays. I’m not really sure what you mean. The ordinary meaning of expenditure is _the act of spending funds_. If that’s what you mean, then you’re saying spending money on stocks is spending money on stocks. If you mean something else, please tell me what it is. I’m not sure why you used the phrase “personal cash” (as opposed to what? credit cards? debit cards? checks?), and I’m not sure what the number of times the word “spending” appears in a report has to do with anything. > [@](#): > > Personal Income, Personal Outlays, and Personal Saving are metrics used to measure activity by individuals, and are not applied to businesses by definition. As the BEA mentions in its definition, persons, business proprietors, and business partnerships are all lumped into the category of individuals for BEA purposes. No, this does not conform to the common, everyday, definition of the word “individual”. The BEA is specifically choosing to define the word “individual” in a certain manner for its purposes. > > So again, when the BEA is reporting a Personal Saving Rate in its monthly report, it is: > > 1. Estimating Personal Income for individuals over the past month > 2. Estimating Personal Taxes paid by individuals over the past month, and subtracting that from Personal Income to determine Personal Disposable Income > 3. Estimating Personal Outlays (not all Personal Expenditures, Personal Outlays only!) by individuals over the past month, and subtracting Outlays from Personal Disposable Income to determine Personal Saving. > 4. Dividing Personal Saving by Personal Disposable Income to determine the Personal Saving Rate. I get all of that, but “outlays” seems to be the slippery word here. Clearly, the BEA is using “outlays” in a non-standard way: to mean spending on consumption, as opposed to investment. But to complicate matters, they seem to be using “consumption” and “investment” in non-standard ways as well. Using the word “outlays” without explaining what it means, or without explaining what they mean by “consumption” and “investment” doesn’t explain much at all. --- _[View the full topic](https://boards.straightdope.com/t/what-is-personal-savings/684035)._