Updated on March 11, 2023
Dissavings is a situation where the individual spends more than what they earn. This excess spending is funded through borrowings through personal loans or payday loans, credit card loans, etc.
This is not a healthy practice as its leads to cases like debt traps and permanent damages to the credit score and creditworthiness of the person.
The most common entity facing dissavings is the government of the country. The governments of developing nations are usually in a state of dissavings due to numerous factors like high trade deficit, excessive investments in infrastructure and public utilities, etc. Dissavings can be a result of poor financial planning and unnecessary spending by the individual or the entity or loss of adequate income sources on account of any manmade or natural disasters.