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Table of Contents

What is Dissaving?

Understanding Dissaving

When the Government Decides to Dissave

Motives to Save

Real World Example of Dissaving

Personal Finance Budgeting and Savings

Definition of Saving

By Maya Dollarhide

Updated September 19 2022

Reviewed by Ebony Howard

The truth is verified by Jared Ecker

What is Dissaving?

Dissacrting is spending more than one’s available income. This can be accomplished through tapping into an account for savings, taking cash advances with the credit card or borrowing against the future earnings through an payday loan.

Understanding Dissaving

To summarize it in a concise manner, dissaving is living beyond one’s financial resources. Negative savings is yet another word that is associated with dissaving.

The most important takeaways

Dissaving is the exact opposite of saving.

It means to spend above the amount of income one earns by using savings, buying on credit, or borrowing money.

Governments can be dissavers also.

If the practice isn’t stopped the practice could continue to spiral in an upward spiral until individual’s savings and available credit are exhausted.

It is important to remember that not every dissaving situation has an negative connotation. For instance, a one who’s saved for a lifetime of work may live comfortably while dissaving. A person earns a fixed income but spends more every month, taking a dip into savings to cover the gap. This is sometimes referred to as planned dissaving.

When Governments Dissave

Dissaving may be seen on an individual or macroeconomic scale. When there is dissaving on the macroeconomic level, it suggests that the whole public or government entity is spending the entire amount of money available and is not saving or investing, or is borrowing to remain the ship afloat. In the end, even installment debt repayments become unmanageable.

Dissaving may reach an unsustainable level after natural disasters like the occurrence of a hurricane, earthquake, or wildfire. Other causes may include conflict, political turmoil or civil disturbances, and hyperinflation. With no money to fall back on, people or their government resort to borrowing to provide their essential needs.

Reasons for Dissaving

The habit of saving can be caused by poor judgment or an unavoidable reaction to an emergency. Unemployment, unexpected illnesses or injury are all events outside of an person’s control that could drain savings and trigger a cash crisis.

The habit of not saving could begin with a string of relatively low purchases made using credit cards. Over time, this can lead to a large credit card debt and income that is diminished by regular payments at an interest rate that is high. The savings that are regular are slowed down or stopped as the person juggles with debt repayments. A sudden event could cause financial trouble for the person.

Real World Example of Dissaving

The United States endured a government shutdown for more than a month from late December 2018 to late January 2019. A large number of federal workers and contractors were either furloughed or forced to take unpaid leave. The U.S. Bureau of Economic Analysis (BEA) estimated that 340,000 federal employees were furloughed. Another 460,000 were required to work despite the fact that they were not paid until government funding resumed.1 Without regular paychecks the majority of them were forced to save to live and pay their financial obligations for the month.