Why Do People Save & Invest Money?

Why Do People Save & Invest Money?
••• bank notes image by Alison Bowden from Fotolia.com

Saving and investing money is a stepping stone to managing spending habits and preparing for future expenses. Most people recognize the need to put money away for events or circumstances that may come up down the road.

Manage Personal Finances

People save and invest money to manage their personal finances. According to the FDIC, improperly managing money and overspending takes away from priorities such as long-term savings. Creating a savings and investment plan allows people to properly control their finances.


People save and invest money to supplement their retirement income. Retirement accounts allow investors to deposit a portion of their income into investments that may achieve a projected rate of return until the person reaches retirement age. Once the person retires, he can use his savings to pay for living expenses.


Tax Advantages

People save and invest money to take advantage of certain tax benefits. Investing in tax-deferred or tax-exempt accounts allows investments to grow tax free which can benefit consumers in higher tax brackets or with special tax situations.