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Table of Contents

What is Dissaving?

Understanding Dissaving

When the Government Decides to Dissave

The reasons to not save

Real World Example of Dissaving

Personal Finance Budgeting and Savings

Definition of Saving

By Maya Dollarhide

Updated September 19 2022

Review by Ebony Howard

The truth is verified by Jared Ecker

What is Dissaving?

Dissaving is spending money beyond one’s income. This may be accomplished through using a savings account, taking cash advances on a credit card or borrowing against future income by taking out the use of a payday loan.

Understanding Dissaving

To put it simply, dissaving is living above one’s means. Negative savings is a different word that is associated with dissaving.

The most important takeaways

Dissaving is the opposite of saving.

It’s when you spend more than one’s earnings by drawing from savings, buying on credit or borrowing funds.

Governments can be dissavers, too.

If the practice is unchecked, dissaving may continue in an upward spiral until individual’s savings and available credit are exhausted.

It should be noted that not every dissaving situation has a negative connotation. For example, a retired individual who saved for many years of working could have a comfortable life while dissipating. The person has a certain fixed income but spends more each month, and dips into savings to cover the difference. This could be referred to as planned dissaving.

If the government decides to not

Dissaving could be evident on an individual or macroeconomic level. If there is a dissaving trend on a macroeconomic level, it suggests that the entire public or government entity is spending all available funds but isn’t saving or investing, or is borrowing to keep in the water. In the end, even installment debt repayments will become too much.

Dissaving may reach a tipping point after a natural disaster such as an earthquake, hurricane, or wildfire. Other causes may include conflicts, political instability or civil unrest, as well as hyperinflation. With no money to fall back on, people or their government resort to borrowing to provide the necessities of life.

The reasons to not save

Dissaving may be a habit caused by poor judgment or an unavoidable reaction to an emergency. Unemployment, unexpected illnesses, and accidents are all circumstances beyond the individual’s control that can exhaust savings and lead to a cash crunch.

A habit of dissaving may begin with a sequence of expenses made with credit cards. As time passes, this may result in a hefty credit card balance and an income that is diminished through regular payments with an interest rate that is high. The savings that are regular decrease or cease while the individual juggles with debt repayments. Unexpected events can cause financial trouble for the person.

Real World Example of Dissaving

The United States endured a government shut down for more than a month , from the end of December 2018 to January 2019. A large number of federal workers and contractors were furloughed or required to take unpaid time off. The U.S. Bureau of Economic Analysis (BEA) estimated that around 340,000 federal workers were forced to work without pay, and another 460,000 had to work despite the fact that they would not receive a pay check until the government’s funding resumed.1 With no regular paychecks most of them were forced to save to make ends meet and pay their financial obligations each month.