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Table of Contents

What is Dissaving?

Understanding Dissaving

When Governments Dissave

Motives to Save

Real World Example of Dissaving

Personal Finance Budgeting & Savings

Dissaving Definition

By Maya Dollarhide

Updated September 19, 2022

Review by Ebony Howard

Fact checked by Jared Ecker

What is Dissaving?

Dissacrting is spending more than one’s available income. This can be accomplished by opening a savings account, taking cash advances from the credit card or borrowing against future income via a payday loan.

Understanding Dissaving

To state it concisely to put it simply, dissaving means living beyond one’s financial resources. Negative savings is a different term associated with dissaving.

The most important takeaways

Dissaving is the reverse of saving.

It is the act of spending more than one’s earnings by drawing from savings, making purchases on credit or borrowing funds.

Governments can be dissavers also.

If the practice is unchecked the practice could continue to spiral in a downward spiral until an individual’s savings and credit are exhausted.

It is important to note that not all dissaving has an negative connotation. For instance, a individual who saved for an entire career could have a comfortable life while dissipating. The person is on a fixed income but spends more every month, taking a dip into savings to cover the deficit. This might be called planned dissaving.

When the Government Decides to Dissave

Dissaving may be seen at an individual or macroeconomic level. When dissaving occurs on the macroeconomic scale, it means that the entire public or government entity is spending the entire amount of money available, is not investing or saving, and is borrowing to remain afloat. Eventually, even the installment debt repayments will become too much.

Dissaving can hit a tipping point after a natural disaster such as an earthquake, hurricane or wildfire. Other causes could be conflicts, political instability or civil unrest, as well as hyperinflation. Without funds to fall back upon individuals or their governments are forced to borrow money to pay their essential needs.

The reasons to not save

The habit of saving can be that is the result of poor judgement or an unavoidable reaction to the onset of a crisis. In the event of unemployment, illness that is unexpected or accident are just a few situations beyond an individual’s control that can exhaust savings and cause a cash crunch.

The habit of not saving could begin with a string of relatively small purchases made using credit cards. As time passes, this may result in a hefty credit card debt and income that is compromised due to regular payments that carry an interest rate that is high. Savings on a regular basis slow down or stop as the person juggles debt payments. A sudden event could become a financial catastrophe for the individual.

Real World Example of Dissaving

The United States endured a government shutdown that lasted more than a month , from late December 2018 to late January 2019. A large number of federal workers and contractors were forced to work without pay or forced to take unpaid leave. According to 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 were required to work despite the fact that they wouldn’t receive a paycheck until the government’s funding resumed.1 In the absence of regular pay the majority of them were forced to save to live and pay their monthly financial obligations.