To understand this verse correctly, we may consider a few others verses of Qur'an which will make the meaning of Holding Allah in awe will be better understood.
Tafsir Ibn-Kathir:
(فَاتَّقُواْ اللَّهَ مَا اسْتَطَعْتُمْ So have Taqwa of Allah as much as you can;) meaning, as much as you are able and can bear or endure. The Two Sahihs recorded that Abu Hurayrah said that the Messenger of Allah said, (When I command you to do something, do as much as you can of it, and whatever I forbid for you, then avoid it.)
Allah's statement, (وَاسْمَعُواْ وَأَطِيعُواْ listen and obey,) means, obey what Allah and His Messenger command you to do and do not stray from it to the right or left. Do not utter a statement or make a decision before Allah and His Messenger issue a statement or decision. Do not ignore what you were ordered to do, nor commit what you were forbidden from doing.
Encouraging Charity, Allah the Exalted said, (وَأَنْفِقُواْ خَيْراً لاًّنفُسِكُمْ and spend in charity; that is better for yourselves.) meaning, give from what Allah has granted you to your relatives, the poor, the needy and the weak. Be kind to Allah's creatures, just as Allah was and still is kind with you. This will be better for you in this life and the Hereafter. Otherwise, if you do not do it, it will be worse for you in this life and the Hereafter.
Allah said; (وَمَن يُوقَ شُحَّ نَفْسِهِ فَأُوْلَـئِكَ هُمُ الْمُفْلِحُونَ And whosoever is saved from his own greed, then they are the successful ones.) A similar verse appears at the end of 9th verse of Surah 59. Al Hashr, where we also mentioned the relevant Hadiths (reproduced herein under:
(وَمَن يُوقَ شُحَّ نَفْسِهِ فَأُوْلَـئِكَ هُمُ الْمُفْلِحُونَ and whosoever is saved from his own greed, such are they who will be the successful.) indicating that those who are saved from being stingy, then they have earned success and a good achievement.
Imam Ahmad recorded that Jabir bin `Abdullah said that the Messenger of Allah said:
(Be on your guard against committing oppression, for oppression is a darkness on the Day of Resurrection. Be on your guard against being stingy, for being stingy is what destroyed those who were before you. It made them shed blood and make lawful what was unlawful for them.) Muslim collected this Hadith.
Ibn Abi Hatim recorded that Al-Aswad bin Hilal said that a man said to `Abdullah (bin Mas`ud),"O Abu `Abdur-Rahman! I fear that I have earned destruction for myself.' `Abdullah asked him what the matter was and he said, "I hear Allah's saying:
(And whosoever is saved from his own greed, such are they who will be successful.) and I am somewhat a miser who barely gives away anything.' `Abdullah said, "That is not the greed Allah mentioned in the Qur'an, which pertains to illegally consuming your brother's wealth. What you have is miserliness, and it is an evil thing indeed to be miser.'
Yusuf Ali Explanation:
"Fear Allah" combined with "as much as you can" obviously means: "lead lives of self-restraint and righteousness": the usual meaning of Taqwa: see note to to ii. 2 (reproduced herein under for better understanding):
(2:2 This is the Book; in it is guidance sure without doubt to those who fear Allah) Taqwa and the verbs and nouns connected with the root, signify: (1) the fear of God which according to the writer of Proverbs (i.7) in the Old Testament is the beginning of Wisdom; (2) restraint, or guarding one's tongue, hand, and heart from evil; (3) hence righteousness, piety good conduct. All these ideas are implied; in the translation, only one or other of these ideas can be indicated according to the context. See also xivii 17; and ixxiv 56
Charity is meant to help and do good to other people who need it. But it has the highest subjective value for the person who gives it. Like mercy "it blesseth him that gives and him that takes". It purifies the giver's soul: the affection that he pours out is for his own spiritual benefit and progress. Cf. Coleridge: "He prayeth best who loveth best all things both great and small, for the Great God Who loveth us, Who made and loveth all".
Cf. lix. 9. Our worst enemy is within ourselves, -the grasping selfishness which would deprive others of their just rights or seize things which do not properly belong to it. If we can get over this covetous selfishness, we achieve real Prosperity in justice and truth.
Tafsir Qur'an Wiki:
The believers are admonished to do their best to remain God-fearing and to obey God's orders. Here we see an aspect of God's care as He restricts what is expected of the believers to that which remains within their power and ability. He knows the limit of what they can do in obedience of Him. The Prophet says: "When I give you an order, do it as best you can, and when I prohibit something, refrain from it completely." [Related by al-Bukhari and Muslim.]
Limits cannot be set on obeying an order to do something. Therefore, what is within one's ability and power is sufficient. On the other hand, prohibition cannot be divided. It is required in full.
They are also called upon to be generous in what they donate: "And be charitable. That will be best for you." Normally, they spend their money on their own needs. God instructs them to spend in charity what is good for themselves. Thus, when they are charitable, they are actually spending their money on what is good for themselves. The surah also depicts meanness as a plague, one they must try to get rid of.