Saving and Investment Pattern of Rural and Urban Households: A Conceptual Model

People save so that they can consume more in the future. A decision to spend now or save is solely a personal choice made by the income earner. But this decision depends upon a variety of factors which include disposable income, real interest rates and demographic factors to name a few. People have different behaviour towards savings and disparities in income levels. There are people who believe that money obtained today must be used to meet present needs and the future will care for itself. There are others who also hold the view that no matter how little one‟s income is there is the need to save part of that income. The objective of this paper is to develop and propose a conceptual model that studies the influence of different determinants on the savings of households. This paper will help the marketers and the government to formulate strategies focussing on these determinants so as to increase savings. Increased savings would in turn help achieve the objective of economic growth of the state as well as the country.