April 26, 2021

Consequences of not saving money 2 piggy banks out at sea, showing drowning savings


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Why is saving money important?


When saving money it can be really hard to motivate yourself and keep away from the temptation of daily life, shopping. Especially when interest rates are at an all time low, you think to yourself is there any point in saving money?

Well yes there is, and I will show you what the consequences of not saving money are to give you some extra motivation towards having some money set aside for a rainy day.

Here are 9 consequences of not saving money to help you avoid these mistakes! 

A poor credit score

Whilst having no savings does not directly impact your credit score it could very likely lead to a poor credit score. Here is what credit Expert Experian said on the matter:

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healthy savings can help protect your credit rating

Depleting a substantial rainy day fund may change your overall financial situation, and that can cause a ripple effect that leads to future credit problems. For that reason, maintaining healthy savings can help protect your credit rating.

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You need to consider credit utilization rate when wondering why it's important to keep savings. Credit utilization is the second most important scoring factor in your credit score so if you are constantly dipping into credit card and using its credit amount your credit utilization will be high meaning lenders will be less likely to want to lend you money.

Financial emergencies will floor you

Some people might think they are unlucky that their car needs a sudden repair or they just got a speeding ticket and have to pay a fine. These types of events can put anyone into debt. 

Well let me tell you luck has little to do with it and being unprepared has more to do with it. Let’s be honest we all know by now that life is unpredictable, but like anything in life there are ways to throw the odds in your favour.

This is being prepared for a financial emergency by having a rainy day fund set aside. You can call this fund whatever you want it could be called your stupid things happen fund. 

rainy day fund helps stop consequences of not saving money


But by not having it, you risk going into debt at any moment and this is because your current spending only accounts for general things you expect to happen. 

No one expects to get a fine or a sudden bill. I can’t stop any of these things happening to you but I can help you be prepared by saying have an emergency fund. 

And this can be so easy to set up, by putting an automated payment into a pot or separate account each month. 

I use Starling Banks' pot system to do this and automate a set amount of money each month that I won’t miss to build by emergency fund. 

Debt could creep up on you

By not saving your money it also could mean you are not managing your money and spending effortlessly. 

This is a behaviour that could set you on a track to debt. Let me tell you that’s not a good feeling or a place to be in. 

Debt happens when you spend more than you earn or outlife your means, it also happens when life events happen and you are not prepared for them. 

Saving money allows you to be prepared for the future and able to deal with to an extent what life throws at you. 

Life’s big moments won’t feel as great as they should

Getting married, having a baby, moving house? These are all big moments in anyone's life and moments that you will probably want to celebrate with those closest to you. 

Unfortunately all of these big moments, although precious, are expensive and you will probably be able to relate if you have experienced them.

Having savings takes the pressure off when these events happen. It gives you the choice of how you want to celebrate and gives you the power to celebrate how you want to without constraints of pressure. 

Constantly feeling under pressure

By not having any savings you could end up feeling under pressure a lot of the time which isn't great for your health. 

Lets say your friends want you to go with them on holiday once a year but you can never go because you don’t have the money, savings can help with this!

There is also being able to pursue your passions if you are in a job you hate but want to take a chance on something else you are really caught between a rock and a hard place if you have no savings to pay bills whilst you explore. 

I remember watching a interview with Lucy Lui where she describes this as “f*ck you money” the ability if you are in a situation where you job is making you so unhappy that you are in a position where you can leave. Check it out below: 


This could lead you in a situation where you are ultimately unhappy just because you don't have savings. 

Freedom to do stuff

Let’s be honest money unfortunately could drive freedom in your life to experience things and that's why saving is a good thing. Not only are you prepared for the worst to happen but you are prepared for the good things in life too. 

Lets say your favourite singer launches an unexpected one off tour and you want to go but can’t because you don't have the funds. 

You don’t want to be tied up your whole life not being able to do stuff, so save so you can set yourself free and do what you want!

Less chance of generating wealth

Lots of us want to generate wealth but to do that we need some savings. This could be savings to put down a deposit for a house or savings to invest in our future. 

Saving money is one of the key things you need to be able to do if you want to generate wealth. 

Of course there is a lot of money to generate wealth then having savings in the bank you have to learn what to do with it after, but my point is that the starting point is having savings. 

You will not be able to start investing

Because you have no savings, any leftover money you do end up with is so precious that you have no risk tolerance. 

And let’s be clear, I am not advising you to go out investing but if you had a dream to invest money like me then before that happens you need to have a small amount of money set aside.

This is because investing in the stock market is a long term game so you can't withdraw it after a years time when you have an emergency. 

Investing is a strategy that a lot of people use to generate wealth including the likes of Warren Buffett. But to invest responsibly you need to have savings set aside. 

You won’t be able to help people

I’m not just talking about charity here but what I mean is those closest to you like your friends and family.

Imagine your child has bought a new house and needs support furnishing it, I'm sure you would want to contribute. 

Or maybe you have a friend in financial need, having savings doesn't just mean you can contribute to your own future but it means you can contribute to those most important to you. 

For me personally that a rewarding thing being able to help those that really matter to you. 

How to avoid the consequences of not saving

So now you're convinced that saving money is a good idea and you want to avoid the consequences of not saving money! But then you remembered how hard it is to save money in the first place!

Here are some easy ways to save without thinking about it:

Set a up a budget that is easy to understand

First of all a budget doesn't mean to be without it just means to sit down and estimate your expenditure and income. You can still budget to have fun and here's how:

Use a really easy budget to follow, my favorite is the 50/30/20 budget, you can even get a free budget calculator from this site. 

pie chart split into 3 showing 50/30/20 rule budget 50% needs Housing Groceries Utility Bills Transport insurance 30% wants gym shopping 20% savings


The great thing about the 50/30/20 budget is that its not complicated. There are literally 3 categories and one of the categories is having money that you can spend on things you want. 

Meaning you don’t need to feel guilty about spending your money on something that you want, this budget just teaches you to do it in moderation. 

Use a bank that saves money for you automatically

There are several advantages of living in a digital era and one of them is digital banks and I personally think that they are awesome!

One of my favorites is Starling bank, which is a free to use online bank that automatically rounds up your spending to the nearest pound! 

All you have to do is set up a savings pot within the Starling app on your phone and swipe the round up spending button on. 

You can round your spending up to 10x to the nearest pound if you want to supercharge your savings! 

Want to learn how to budget? Check out Budgeting Tips 15 to help you today


Consequences of not saving money: Final thoughts 

The consequences of not saving money can be drastic, whether that's getting you into serious debt or constantly feeling under pressure. The outcome is never good. 

Yes it's hard to be disciplined to save money but once you have a little bit saved it does get easier and you start to feel better about yourself and your prospects longer term. 

You also don’t need to change your lifestyle drastically to be able to save experts say just saving 15% of your monthly income can have a big impact on your future prospects. 

As i’ve said earlier in this article life is unpredictable but you can throw the odds in your favour just by have a little in the bank for those rubbish moments (and the plan for the good ones ;)) 

Will you start to save? Let me know in the comments below! 

Like this article? Then please share so MeMoreMoney can help others too! 

About the author 

Mary Elizabeth

Founder of MeMoreMoney. A self-taught finance nerd, learning by doing and experiencing. Bought first house at 21, paid off student debt, and save 100k by 30. Featured Personal Finance Expert in GO Banking Rates and Yahoo! Finance

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