What it is
Dissaving is the act of spending more money than you’re earning. It is the opposite of saving and can affect individuals, households, and even governments.
This often happens when a person or entity uses up their savings or takes on debt to cover spending. It often results in negative net savings, or the amount of money you have minus debt payments and expenses.
What it means for you
You might enter a period of dissaving if you’re frequently spending beyond your means. When you’re constantly dipping into the cash you put aside, you may eventually deplete the money that’s meant for emergencies or other goals.
You might also end up with more debt than your income can cover. Dissaving can delay your progress toward money goals like investing or preparing for retirement.
On a bigger scale, governments that spend all available money will likely borrow more to keep their operations going.
This may affect citizens if the national debt balloons and the government is unable to pay. At worst, this dissaving may lead to government bankruptcy.
To avoid dissaving as an individual, it’s ideal to find a budgeting strategy that works for you. It also helps to build a sound emergency fund to prepare for unexpected situations that may be costly.
