An important factor that influences consumption is each household s net wealth. Net Wealth is the value of a household's assets minus its liabilities. Assets include things like a home, cars, furniture and appliances, money in the bank, value of your financial investments, and money in your pension fund. Liabilities include things like the mortgage, car note, credit card balances, etc. To increase net wealth, your family can save or can pay off debts.
Net wealth is held constant along a given consumption function.
If net wealth changes, the consumption function shifts. A decrease in net wealth would make consumers less inclined to spend rather than save at each level of income. This decline in net wealth makes the household feel poorer so they spend less. A decrease in net wealth causes the households to save more and spend less at each level of income. An increase in net wealth would make consumers more inclined to spend rather then save at each level of income.