CHAPTER II

LITERATURE REVIEW

Review of Related Literature

Saving

Saving in a simple definition is the excess of income over all expenditure, where the

expenditures are also mentioned as consumption, which is life contributions and insurance and

the saving behavior is the money keeping activity after they use it for their own wealth (Denton,

Fretz, & Spencer, 2011).

According to Keynesian economics (2019), savings are what a person has left over when

the cost of his or her consumer expenditure is subtracted from the amount of disposable income

earned in a given period of time. Savings refers to any income that we do not spend and put aside

– we put the money away. It is the portion of our disposable income that we do not spend on

consumer goods, but accumulate or invest.

Saving has different meaning to every people. To some it means putting money in the

bank. To some, it means putting money in the bank. To others, it means buying stocks or

contributing to a pension plan. But to economists, saving means only one thing—consuming less

out of a given amount of resources in the present in order to consume more in the future. Saving,

therefore, is the decision to defer consumption and to store this deferred consumption in some

form of asset (Kotlikoff, 2019).

In addition, according to editor of encyclopedia of Britannica Gloria Lotha (2019), saving

is process of setting aside a portion of current income for future use, or the flow of resources
accumulated in this way over a given period of time. Saving may take the form of increases in

bank deposits, purchases of securities, or increased cash holdings. The extent to which

individuals save is affected by their preferences for future over present consumption, their

expectations of future income and to some extent by the rate of interest.

The word “saving” contained broad-based meaning and numerous explanations.

In economic contexts, saving is defined as the residual income after deducting current

consumption over a certain period of time (Browning & Lusardi, 1996; Warneryd, 1999).

Conversely, saving in psychological context is referred to the process of not spending money

for current period in order to be used in future (Warneryd, 1999).

Saving Behavior

According to the Maps world of finance (2018), saving behavior is defined as an

understanding on how people save in a country in order to realize the economic condition of that

country. It is normal facts that if people are saving more, the levels of their personal disposable

income are increasing as well. This also implies that the living standard of people will increase

as well.

In other word, saving behaviour is the combination of perceptions of future needs, a

saving decision and a saving action. On the other hand, people are likely to define saving as

investing, putting money in a bank account, speculating and paying off mortgages (Warneryd,

1999).
Coin Banks

According to Ashish (2017) Piggy banks also known as coin banks are not actually

named after pigs; in fact, they date back to the Middle Ages, when a type of clay – called ‘pygg’

– was used to make pots that could store money.

Containers for storing coins, known as moneyboxes or coin banks, have been used for

centuries. To encourage saving, a small slit was placed on the top of these so that coins could

enter but not exit. Because the only way to get the coins out was by breaking the container, they

were mostly made of cheap materials. Eventually, these simple containers evolved into piggy

banks.

Early piggy banks are hardly ever found—they were shattered in order to retrieve the

saved coins—which has made it difficult to study their beginnings. Still, a couple of theories

exist regarding the origins of the piggy bank . The most common legend of how piggy banks

were created dates back to 15th century Europe, where a type of clay called pygg was used to

make plates, bottles, and vessels. When people threw their spare coins into these types of pygg

containers, they started to call them pygg banks. Eventually, through a misinterpretation of the

word pygg as pig, potters began to construct moneyboxes into the shape of pigs. As a result, the

piggy bank was invented.

Before the creation of modern-style banking institutions, people commonly stored their

money at home — not under the mattress (or hay rack), but in common kitchen jars. During The

Middle Ages, metal was expensive and seldom used for household wares. Instead, dishes and

pots were made of economical orange-colored clay called pygg. Whenever folks could save an

extra coin or two, they dropped it into one of their clay jars — a pygg pot. (Woodruff, 2012).
 People have been saving money since, well, whenever currency came into existence, i.e.

thousands of years ago. However, unlike other household things, money (which predominantly

existed as coins in ancient times), had to be kept somewhere safe and protected. This resulted in

the rampant use of boxes and containers to store money.

Nowadays, piggy banks are used all over the world. The major change to most of them is

that they have a removable part on the bottom that releases the coins. Even though piggy banks

are intended for children, their important lesson of saving money is widespread and truly

priceless (College Weekend, 2014).

REFERENCES

https://marketbusinessnews.com/financial-glossary/savings-definition-meaning/

https://www.britannica.com/topic/saving

https://www.investopedia.com/terms/s/savings.asp
https://www.econlib.org/library/Enc/Saving.html

https://www.ukessays.com/essays/economics/an-analysis-of-saving-behaviour-in-malaysia-

economics-essay.php

Warneryd, K. E. (1999). The psychology of saving: A study on economic

psychology.Cheltenham, UK: Edward Elgar.

https://www.businessinsider.com/revealed-the-true-origin-of-the-piggy-bank-2012-6

https://www.mentalfloss.com/article/54443/why-do-we-put-money-piggy-banks