By: Perdana Wahyu Santosa*
JERNIH– The tendency of people to save reflects the balance between income, consumption, and confidence in the future of the economy. In the Indonesian context, the Consumer Saving Index (Indeks Menabung Konsumen/IMK) is an important barometer for assessing household economic resilience.
When the IMK declines, it is not merely a statistic—it is a signal that people are beginning to sacrifice long-term asset accumulation for short-term needs. This decline should be read as a reflection of increasingly pressing structural economic pressures on real household welfare.
The reported decline in IMK in September 2025 has drawn wide attention. Data from the Indonesia Deposit Insurance Corporation (LPS) shows that the IMK fell to 77.3, down 1.6 points from the previous month. More specifically, the Saving Intensity Index (IIM) dropped to 67.1, while the Saving Time Index (IWM) slightly increased to 87.4. This means that people still believe saving is important, but their actual ability to do so is weakening.
This phenomenon raises a fundamental question: are people truly losing purchasing power, or is there a deeper shift in financial behavior?
In classical and modern economic theory, savings are seen as the portion of income remaining after consumption. Milton Friedman’s Permanent Income Hypothesis explains that saving decisions depend on long-term income expectations, not just current income. If individuals feel that the future is uncertain, they tend to restrain consumption and strengthen savings.
However, when economic pressure causes almost all income to be absorbed by basic consumption, the space for saving disappears. In behavioral economics, psychological factors such as confidence in financial stability, optimism about the future, and risk perception also influence saving behavior. Thus, the decline in IMK is not only the result of objective economic pressure, but also a reflection of the subjective feeling that the future is not yet secure.
Problem Discussion
The first factor explaining the weakening of saving intensity is the increasing burden of household expenditure. Living costs have risen consistently, especially in education, health, and energy. In certain months such as the start of the school year, household spending spikes significantly and reduces saving capacity. LPS notes that rising education costs are the main cause of the IMK decline in September 2025. For middle-class families, saving is no longer a priority but a luxury.
Second, inflationary pressure—although statistically controlled—remains heavy at the micro level. People do not calculate inflation the way statistical agencies do; they measure it through their wallets. When the price of basic goods rises faster than wages, real income is eroded. As a result, savings become the first casualty. This reflects a classic paradox: the macroeconomy may appear stable on paper, while households experience the opposite reality.
The third factor is economic uncertainty. In a volatile global environment—with high interest rates, slowing exports, and the threat of layoffs in several sectors—people tend to avoid long-term financial decisions. However, instead of increasing precautionary savings, some shift toward holding cash at home or buying non-financial assets such as gold. This shows that the decline in IMK does not always mean a decline in saving intention, but rather a shift from formal to informal saving instruments. The problem is that this shift reduces fund circulation in the formal financial sector and weakens investment financing sources.
The fourth factor is the low return on savings products. When savings and deposit interest rates are lower than inflation, saving becomes unattractive. Rational consumers will look for alternatives—either direct consumption or higher-risk investments. The rising interest in stocks, mutual funds, and even digital assets reflects this search for higher returns. However, this shift makes formal IMK data appear lower, even though funds are moving into non-savings instruments.
The fifth factor is trust in financial institutions. Some lower-middle-class households still have negative experiences: reduced balances due to administrative fees, rigid services, or cases of fintech fraud. As a result, saving in banks is not always perceived as safe or beneficial. This poses a major challenge for the financial system: how to rebuild trust and make saving both a rational and emotional economic behavior.
The sixth factor relates to income distribution. Data shows that the decline in IMK is more pronounced in the upper-middle-income group. This may seem paradoxical, but it is actually rational. This group is more sensitive to market movements and exchange rates and has the flexibility to shift funds into short-term investments. Meanwhile, lower-income groups even recorded a slight increase in saving intensity due to social assistance programs or digital cash transfers. This shows that saving behavior is asymmetrical across income segments.
Recommendations
The first step is to strengthen financial literacy and education comprehensively. Many people do not yet understand that saving is not merely “putting aside leftover money,” but a long-term risk management strategy.
Public education must involve schools, workplaces, and digital communities so that saving behavior becomes an ingrained habit from an early age. Financial literacy must also emphasize diversification: dividing funds between liquidity needs, formal savings, and safe investments.
The second step is to enhance the attractiveness of savings products by innovating and expanding access to safe digital finance and fintech. Banks and financial institutions need to offer more flexible instruments: progressive interest savings, loyalty bonuses, or auto-debit systems with minimum balances. Features that allow partial withdrawals without penalties will reduce psychological resistance to saving. The government may also provide tax incentives for individuals who consistently save over a certain period, or introduce a matching fund scheme where the state adds a small amount to savings of low-income households.
The third step is to maintain macroeconomic and socio-political stability. Inflation control, job security, and stable prices of basic goods will increase public economic confidence. When future expectations improve, saving behavior will recover naturally. Therefore, fiscal and monetary policy should not only target growth figures, but also public perception of long-term economic security. Trust is the psychological foundation of national savings.
Conclusion
The decline in consumer saving intensity should not be underestimated. It is an honest reflection of the pulse of the people’s economy. On one hand, it signals expenditure pressure and economic uncertainty; on the other, it shows that financial behavior is evolving. The challenge is not merely to increase the IMK figure, but to rebuild trust that saving is rational, safe, and socially meaningful.
As the backbone of the national economy, household savings are the lifeblood that channels liquidity into banking systems, investment, and development. If this flow weakens, economic growth will lose its heart. Therefore, strengthening a culture of saving cannot be delayed—because this is where economic resilience grows, not from grand macroeconomic policies, but from the simple decisions of millions of families to set aside a small portion of their income for the future.
