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Table of Contents

What's the difference between saving and dissaving?
Understanding Dissaving
When Governments Dissave
Motives to Save
Real World Example of Dissaving

Personal Finance Budgeting and Savings

Definition of Dissaving
By Maya Dollarhide
Updated September 19 2022
Review by Ebony Howard
Fact checked by Jared Ecker
What is Dissaving?

Dissacrting is spending more than the income available. This may be accomplished through using an account for savings, taking cash advances with the credit card, or borrowing against future income through a payday loan.
Understanding Dissaving

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

Dissaving is the opposite of saving.
It is the act of spending more than one's income by dipping into savings, buying on credit, or borrowing money.
Governments can be dissavers, too.

If this practice is not regulated and the dissaving process continues, it could spiral into a downward spiral until an individual's savings and credit have been exhausted.

It is important to note that not all dissaving has negative connotations. For example, a retired individual who saved a lifetime of work may have a comfortable life while dissipating. A person earns a fixed income, however they spend more each month, and dips into savings to cover the gap. This could be referred to as planned dissaving.
When the Government Decides to Dissave

Dissaving could be evident on an individual or macroeconomic level. When there is dissaving on the macroeconomic level, it suggests that an entire population or government is spending the entire amount of money available and is not saving or investing, or is borrowing to stay the ship afloat. At some point, the installment debt repayments will become too much.

The rate of saving can reach a tipping point after an natural catastrophe such as an earthquakeor hurricane or wildfire. Other reasons could include political upheaval, war or civil disturbances, and hyperinflation. With no funds to fall back upon individuals or their governments resort to borrowing to provide their essential needs.
Reasons for Dissaving

It could be a habit due to poor judgement or an unavoidable response to an emergency. Unemployment, an unexpected illness or accident are just a few circumstances beyond the person's control that could drain savings and lead to an emergency cash shortage.

The habit of not saving may begin with a sequence of relatively small purchases made using credit cards. In time, this could create a huge credit card debt and income that is diminished by regular payments at a high rate of interest. Regular savings decrease or cease when a person is juggling the debt payment. Unexpected events can cause financial trouble for the person.
Real World Example of Dissaving

The United States endured a government shut down for over a month between late December 2018 to late January 2019. A large number of federal workers and contractors were either furloughed or forced to take unpaid vacation. It was the U.S. Bureau of Economic Analysis (BEA) estimated that around 340,000 federal workers were furloughed. Another 460,000 had to work despite the fact that they were not paid until government funding resumed.1 With no regular paychecks, many of these people were forced to save to make ends meet and meet their financial obligations each month.
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Article Sources
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