What is the primary function of savings?

The primary function of savings is to accumulate money for future use or emergencies. This means setting aside funds that can be drawn upon when unexpected expenses arise, or for future goals such as purchasing a home, funding education, or simply providing a financial cushion. Savings help individuals build a safety net against financial uncertainties, allowing for greater financial stability and peace of mind.

By putting money into savings, individuals can also earn interest over time, further increasing their financial resources. This contrasts with other functions such as providing instant income for daily expenses, which might lead to spending beyond one’s means if money is always spent instead of saved. Continuous spending on luxury items doesn't align with the foundational purpose of savings, as it does not prioritize future financial security over immediate gratification. While savings can play a role in long-term debt repayment, that is more of a secondary function, as the primary goal is to set aside funds for future needs and emergencies.