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What is the Problem with Low Savings (& How it Affects You)?


Let me ask you a question:

How much savings do you have?

Keep the answer to yourself if you like. We are British, and we view (over)sharing about money as vulgar.

But if you have low savings, keep reading.

According to a recent study, over 11 million people in the UK live in households with less than £1,000 in savings. This is one in three families; statistically, it may mean you.

I am not the one to judge: fifteen years ago, I was in a money place much worse than that. We had £100,000 in consumer debt and less than £500 in savings.

You see, I know the insecurity coming with low savings. I have felt the crushing weight of fear and anxiety.

Feelings aside, having low savings presents problems that can, and often do, ruin your future.

Today, I’ll explain these problems and how they affect you. Tomorrow, I’ll share ways to boost your savings regardless of your income level.


What is the Problem with Low Savings?

Typically, problems have different weights in your life.

‘Problem causes’ are essential to understand because they spawn many second-level complications.

The main problem, or the ‘problem cause’ when having low savings is that you are financially fragile. It means you are not able to absorb even the slightest financial shock. For example, you can’t mend your car, buy a new fridge, carry out necessary house repairs, cope with unexpected unemployment, or even pay the bills if a sudden increase occurs.

Having low savings and being financially fragile brings a host of problems. You will likely:

#1. Build debt

Life doesn’t stop because you have low savings. Things happen.

Equipment breaks, roofs leak, and employers ‘rationalise’ their workforce. You buy a fridge on your credit card, take a loan to mend the roof and…well, I am not even sure how to tackle unexpected unemployment.

You build credit card debt and have no plan to pay it off.

It could be even worse, and you may need to use the services of sharks offering loans at extortionate interest. There is no coming back from that.

You’ll need more than following the wisest tips on paying off debt.

#2. Reduce your quality of life

Low savings usually go hand in hand with reduced quality of life. It is difficult to enjoy a nice dinner with your partner when you are worried about paying with a credit card.

Being financially fragile is not about money and numbers but about losing happiness and the joy of life.

#3. Fail to achieve long-term goals

Do you want to own your house?

To get an education? Or help your children get an education?

Do you have visions of retirement by the sea?

Forget all of it.

Only with serious savings can these long-term goals be achieved.

#4. Worry about money all the time

Yes, you are likely to worry about money, the bills, and life all the time when you have no savings (or you have insufficient savings).

It is not a life I want to live. Do you?

#5. Develop health problems

Low savings often mean high levels of stress.

You may also experience mental health issues like depression and anxiety, and you may develop high blood pressure.

You may also need to delay your visits to the dentist and the opticians.


You now understand that having low savings can devastate your life, from getting into piles of debt to developing acute medical conditions.

Next time, I will share ways to boost your savings.

Do you think it is impossible?

There is always a way, trust me.

Now I want you to make a cup of coffee (tea), grab a pen and paper and write how having low savings affects your life. You may find that living as you do is scarier than changing your ways.

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