Personal savings in Japan
Households and individuals save to prepare for future consumption. According to a survey, the main motivations to save for Japanese households were to be financially prepared for old age and unexpected events such as illness or disaster. Japanese households are known for a tendency to save rather than spend. In 2022, the average savings of a multi-person household amounted to 19 million Japanese yen and households overall held over two quadrillion yen of financial assets.How are the financial assets of Japanese households distributed? Cash and deposits made up over 50 percent of household savings, reflecting both a preference for cash, as well as an aversion towards investments. To encourage asset building and investment among individuals, tax-advantaged asset formation schemes such as Nippon Individual Savings Accounts (NISA) and individual-type defined contribution pension plans (iDeCo) have been promoted by the government in recent years.
Household savings during the coronavirus (COVID-19) pandemic
In 2020, the household saving ratio in Japan jumped to 11 percent, reaching one of the highest levels since the 1990s. The savings ratio is the amount of net savings as a percentage of the net disposable income of a household. Japan’s high savings rate during the pandemic was no exception, as savings rates were rising worldwide.Two factors likely contributed to the record increase in savings in Japan during the pandemic. First, self-quarantine measures, travel restrictions, and uncertainty about the future economic development prevented people from going out and spending their money, resulting in a decline in consumption. In addition, a Special Cash Payment of 100,000 yen per person paid to all residents to mitigate the effects of the pandemic may have further contributed to the rise in savings.
