11 Alarming Consequences of Not Saving Money You Could Face


Not saving money is not OK. The consequences of not saving money include not being prepared for emergencies, getting caught in a cycle of debt, being unable to retire, being a burden to others, stress, and not having the freedom or flexibility to do what matters to you.

Suffering the consequences of not saving money
Enjoy the positive effects of saving money and avoid the consequences of not saving.

What Happens When You’re Not Saving Money

We all need savings.

Putting money aside is one of the most basic principles of personal finance. We are taught early on that saving money is important. Yet many of us aren’t saving enough or at all despite knowing we should.

If you need reasons to stop neglecting your savings, here are 11 consequences of not saving money:

1. Emergencies Can Wipe You Out

Making a difficult time worse is one of the consequences of not saving money. When a financial emergency like a job loss, a major car repair, or a medical issue pops up, you can wind up broke and carrying a lot of credit card debt if you don’t have an emergency fund.

Starting an emergency fund is essential to your financial health. It provides peace of mind and prepares you for future unexpected expenses like medical bills or other financial emergencies. Having an emergency fund means you won’t have to take out a personal loan or use high-interest credit cards when you facing a crisis.

The standard financial advice is to put aside 3 to 6 months of living expenses. You could get by with less or you might need more depending on factors such as your income stability, health, and how many dependents you have. Your emergency savings should be kept separate from the money you use for your daily expenses and only used for true emergencies.

2. You Lack Freedom and Flexibility

Whenever we consider making a significant life change, money is one of the first things we think about. Money is always a concern when you’re thinking about:

  • Changing jobs
  • Changing careers
  • Becoming a business owner
  • Going back to school
  • Getting married
  • Having kids
  • Moving to a new city

Having money in the bank gives us the flexibility to pivot or try something new. Saving money means we have the freedom to pursue what matters most to us.

Having a healthy savings account also puts you in control. You don’t have to suffer through the whims of landlords, terrible bosses, or unfeeling corporations.

3. Your Life Is Too Stressful

Stress is one consequence of not saving money that could negatively affect your health. Losing sleep over money problems, constantly worrying about rising costs, and being under constant pressure to improve your financial situation can lead to stress-related health problems including depression, diabetes, and heart disease.

4. You Miss Out on Major Life Events

Not having any money saved can make you a bystander in your own life. Without any savings, it’s difficult to fully participate in meaningful major life events. You could be missing:

  • Unforgettable family vacations
  • Weddings
  • Graduations
  • Funerals
  • Family reunions

You feel terrible sitting on the sidelines or telling loved ones you can’t take part because you have no money.

5. You Lose Out on the Power of Compounding

There are many benefits to saving money. One of the best is compound interest. Compound interest makes your savings grow faster. 

Compound interest is the interest you earn on interest. If you don’t save, your money can’t passively earn you more interest. The only way to reap the benefits of compounding is through saving consistently.

6. Home Ownership Is Out

Owning a home is a dream for many people. Putting down roots, stability for your kids, favorable tax treatment, and owning a valuable asset that can appreciate are all good reasons to buy a house.

Before you can own a home, however, you’ll need to have money saved. Upfront costs of buying a home include:

  • A sizable down payment
  • Earnest money
  • Closing costs
  • Prepaid property taxes
  • Homeowners insurance
  • HOA fees

Your dream of home ownership remains a dream until you have money in the bank.

7. You Can’t Build Wealth

Earning money won’t help you improve your financial future or create wealth if you spend it all. Saving money allows you to generate wealth.

You can build wealth by living beneath your means, avoiding consumer debt, and investing wisely. When you spend less than you earn and avoid debt, you free up cash for retirement savings or to put toward another savings goal.

8. Retirement Is Impossible

No matter how much you love your job, you probably don’t want to work 40 or more hours a week for the rest of your life. Retirement can’t happen if you have no savings.

Don’t count on Social Security to provide you with a comfortable life during retirement. The average social security check as of April 2022 is $1,538.14. That works out to $18,457.68 annually, which almost certainly won’t be enough to cover your monthly expenses in retirement.

The only way you’re going to retire comfortably is you start saving for it. The earlier you start building your retirement nest egg, the better.

9. Helping Others Is Not an Option

Family, friends, and the causes we believe in need our support from time to time. And sometimes money is the only way to help. Having to say no is upsetting.

If you want to provide financial support, however, put yourself in a position that allows you to help. You do that by saving money.

Come up with a savings plan and stick to it if you want to provide financial support to the people and charities you believe in.

10. Your Children Have to Support You

One of the less obvious consequences of not saving money for retirement is that someone else may suffer. If you can no longer work or earn enough to support yourself, your family might have to step in. With no nest egg for retirement, the responsibility of taking care of you financially could fall to your adult children.

If you are lucky enough to have children willing and able to support you, doing so brings a heavy burden into their lives. Helping you could be devasting to their financial lives and quality of life.

11. You Have Nothing To Leave Behind

If you want to provide for your family or leave something behind for the public good after you’ve passed, you’ll need to plan and save for it. Having no savings means you can’t help your family, show them you were thinking of them, or give them one final gift once you’re gone. Someone else will also have to foot the bill for your funeral arrangements and burial costs.

4 Steps to Saving Money

If you’re currently not saving any money, you might think that you’re just not good at saving money. That’s probably not true. Perhaps all you need is a plan.

If you want to increase your savings rate, start with these 4 things:

  1. Track your spending. Record every expenditure, no matter how small, for a month. If you don’t know where your money goes, tracking your expenses could reveal a surprise or two.
  2. Eliminate wasteful and unnecessary spending. Review your spending records. Cutting expenses could mean trimming discretionary expenses or making significant lifestyle changes. You might also find you’re overspending on necessities, so you could look for ways to save on groceries, lower your utility or insurance bills, and find cheaper transportation or housing.
  3. Set a savings goal. Now that you know where your money goes and have lowered your spending, you know how much money you can put aside every month. Make a commitment to save that money.
  4. Automate your saving. Set up an automatic transfer from checking to a savings or investment account on or around your paydays. Participate in your employer’s 401(k) or retirement plan and have the money taken out of your paycheck.

Reducing your expenses and eliminating bad spending habits does wonders for your finances. There will come a point where you can’t reasonably cut anything else, however.

Finding ways to increase your income is an equally effective way to free up money for saving. You can ask for a raise, put in extra hours, or use your spare time to get a second job, freelance, or start a side hustle.

Avoiding the Negative Consequences of Not Saving Money

The only way to ensure you can reach your financial goals, avoid the dangers of debt, and not stress over your finances is to save money. You can’t control the future, but you can control how much you save.

Whatever your reasons for not saving money are, you can push past them and make your savings a priority. Building the habit of saving is more important than the dollar amount when you’re starting out. You can always save money aggressively when you’re in a better place financially.

More From Kinda Frugal

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How To Create SMART Financial Goals

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