Why Saving Matters: A Look at the Ten Consequences

Bankrate’s annual emergency savings report is in, revealing shocking facts and figures about the financial status of millions in the United States:

  • 1 in 5 Americans have no emergency savings.
  • 1 in 3 U.S. adults (up from 27% in 2022 to 30% in 2023) have some emergency savings, but the amount is too little to cover three months of expenses.
  • 2 in 3 individuals worry about having insufficient funds to cover a month’s worth of living expenses.
  • 1 in 3 people have more credit card debt than money in the bank.
  • 3 in 4 Americans cannot save because of worsening inflation, rising interest rates, and other economic factors or financial problems.

In addition, while the struggle to begin or maintain a savings account due to economic factors is reasonable, we need to address another barrier to saving money: spending thousands of dollars on unnecessary expenses beyond one’s means, causing self-inflicted financial instability.

The consequences of having no emergency savings can be devastating. It can affect both your immediate financial situation and long-term prospects for a secure future. But it’s not all doom and gloom. If you are on the brink of financial instability with limited savings to fall back on, this comprehensive article exposes the terrible consequences of not saving money and how you can evade worst-case scenarios.


What Happens When You Don’t Save Money

From the stress of living paycheck to paycheck to the missed opportunities for wealth-building, the effects of not saving money can ripple through every facet of life. Let’s explore how financial instability can burden daily living.


1. Panicking during a financial emergency

Without savings, you are ill-equipped to handle unexpected expenses, including medical bills, car repairs, or unemployment. This unpreparedness can result in financial stress, potentially forcing you to rely on high-interest loans or credit cards.


2. Going into debt

Having no savings may lead to overreliance on credit to fund daily expenses or lifestyle choices. Being stuck in this situation can lead to debt accumulation, which can be difficult to pay off due to interest charges, ultimately trapping you in a cycle of debt.


3. Having fewer to no vacations at all

With limited cash, you may have to settle for less enjoyable and budget-friendly options or forgo vacations altogether. Although not the end of the world, if you are someone who looks forward to annual or bi-annual trips to dream destinations with your loved ones, having no savings during an unexpected scenario (such as suddenly losing your job) can prevent you from pulling out all the stops during vacation season.


4. Unprepared for major life changes

Life events such as buying your first car, moving out of your parents’ house, starting a family, or sending your children off to college require significant financial resources. In the words of the younger generations, “Adulting is hard!” Having no savings can get in your way of pursuing these life-changing goals, leading to missed opportunities or excessive debt.


5. Feeling trapped or imprisoned

Savings provide financial freedom and flexibility. Without enough funds, you may feel trapped or be unable to make choices that align with your goals. For example, you may feel stuck in a job you hate because quitting means you won’t afford this month’s rent. Another example is feeling forced or trapped to live an unhealthy life, as you need to put your health goals on hold due to out-of-budget gym memberships and nutritious ingredients.


6. Health issues due to stress

Financial insecurity and the constant worry of having insufficient funds can lead to chronic stress. High-stress levels can take a toll on your mental and physical health, potentially causing depression, anxiety, heart problems, cancer, or even exacerbating existing ailments.


7. Limited ability to build wealth

Lack of savings may make you risk-averse, as you may be unable to invest in opportunities that could yield higher returns. This risk tolerance can hinder your potential for wealth accumulation over time. For instance, if you begin depositing $100 in a savings account at age 25 and gain a 7% annual rate of return, you will amass $120,000 more at 65 than someone who began saving at 35.


8. Inability to support a loved one in need

If you rely on paychecks to afford monthly expenses, assisting a family member or friend in need can be difficult. For example, if a medical emergency arises, you may be unable to help. Being in this financial predicament can be frustrating and heartbreaking, especially if the crisis involves a parent, significant other, child, or best friend.


9. Demonstrating poor financial practices to others

If you have children who look up to you, not saving money can set a detrimental example. It may teach them poor financial habits, perpetuating a cycle of financial insecurity. Prevent ‘financial irresponsibility’ from becoming a family trait.


10. Weak willpower

Saving money necessitates discipline and healthy financial habits. Not saving money can mirror your lack of self-control and goal-setting, which may build a wall between you and success in various aspects of life.



Not saving money can have severe consequences, affecting your financial stability, physical and emotional well-being, and overall quality of life. For your own good, you need to prioritize saving to mitigate these negative outcomes and secure a more prosperous future.

If you are experiencing a financial setback, we highly recommend reading this article to help you find the light at the end of the tunnel.


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