Saving: Why We Preserve Today for Tomorrow

In my previous article, I asked a very basic question: what exactly is money? This time, I want to ask another apparently simple question: what exactly is saving, and why do we do it? To understand saving, we may have to go much further back than banks, salaries and bank balances. Long before human beings had money, they had a much more fundamental problem: nature does not provide resources to us evenly.

About the author: Manmohan Sethumadhavan is a freelancer, investor, and personal finance enthusiast “in search of the absolute truth.” You can follow Manu on Twitter @ManuTsr. He is the author of the popular Revised Capital Gains Taxation Rules Ready Reckoner for FY 2025-2026.

Imagine human beings living in forests and depending directly on what nature could provide. There could be days of abundance and days of scarcity. There could be seasons when fruits were plentiful and seasons when they were not. A successful hunt could provide more food than a group could consume immediately, while a period of bad weather could make food difficult to find. Human beings gradually learnt an extraordinarily important lesson: just because something is available today does not mean it will be available tomorrow.

And so they learnt to preserve. Fruits could be dried. Fish and meat could be dried, smoked or salted. Food that would otherwise spoil could be made to last longer. This was not financial planning, of course. It was something much more fundamental: taking a resource available today and carrying its usefulness into the future. 

Agriculture changed the scale of the problem. Once human beings began cultivating crops, their dependence on seasons became even more obvious. Crops were harvested at particular times, but they had to feed people through the months when nothing was growing. Granaries therefore became extremely important. A harvest was not merely something to consume immediately. Some of it had to be preserved for the non-crop season, and some had to be kept aside against the possibility of a poor harvest or famine. The ability to produce a surplus and preserve it gave a community a buffer against uncertainty. The same thinking applies to water. Rain does not fall exactly when we need it, nor necessarily where we need it. Human beings therefore learnt to store water. Reservoirs, tanks, dams, canals and other systems allowed water from one period to be carried into another. 

Looked at this way, saving is much older than money. Saving is a response to an unavoidable fact of life: resources arrive in one pattern, while our needs occur in another. The groups that were able to preserve food and water had something that others did not. They had a cushion against bad times. A community that consumed every resource during a period of abundance would be more vulnerable when abundance disappeared. A community that could carry some of that surplus forward had more options. It could survive a drought, a failed harvest or a difficult season with less disruption.

This principle also began to operate across generations. A family that preserved resources could give its children something more than food. It could give them time. A child who did not have to spend all of his or her early years searching for food could learn to make tools, cultivate land, build houses, understand nature or acquire some other useful skill. A society that could preserve resources accumulated not just physical wealth but knowledge and human capability.

We can see a similar effect in modern life. Research consistently finds associations between family resources and educational opportunities and outcomes. Parents with greater financial resources are better able to finance education, while household wealth can provide children with opportunities that families without such reserves may struggle to afford. This does not mean that money determines a child’s future; ability, effort, family environment and many other factors matter. But resources can change the starting conditions.

The idea that children should “find their own way” is often used to argue against building wealth for the next generation. There is certainly value in allowing children to develop independence, make their own decisions and experience the consequences of those decisions. But there is an important distinction between allowing someone to find their own way and deliberately making them start from zero. Wealth accumulated by one generation changes the starting position of the next. The child may still have to find the way, but may begin the journey with better education, greater security, productive assets and more opportunities than the previous generation had. Some children will misuse that advantage. Some will squander it. Some will exceed it by a huge margin. But the starting position itself has changed. 

There is also an evolutionary way of looking at this. Richard Dawkins famously described organisms as “survival machines” shaped by natural selection to preserve and reproduce genes. In nature, carrying resources from a time of abundance into a time of need is a widespread survival strategy.

Human beings took this instinct far beyond food. We began storing not just what we needed to survive the next season, but what could help us survive the next generation. And there is an important point here: you and I are already enjoying the savings of people who lived before us.

Look around. Did you build the road that you are travelling on? Did you construct the bridge you cross? Did you build the water system that supplies your house? Did you create the knowledge accumulated over centuries that allows you to use a computer, receive medical treatment or communicate instantly with someone thousands of kilometres away? Of course not. Earlier generations created and preserved resources, knowledge and infrastructure, and we inherited the benefits. In a very broad sense, civilisation itself is accumulated saving. A road is resources taken from the present and converted into something that serves people for many years. A bridge is preserved human effort in physical form. A university, a library or a body of scientific knowledge is an even more obvious example of resources carried forward through time.

Consider a scientist or researcher. Becoming a good scientist may require many years of education and training before the person produces anything that can be sold in the ordinary sense. Society must support that person through universities, grants and institutions, while families often provide support much earlier in life. The resources that make this possible have to come from somewhere. Somebody has to produce the surplus that allows another person to spend years learning rather than immediately earning.

Even old-fashioned retirement planning had much the same underlying logic, long before anyone had heard of mutual funds or pension products. In agrarian societies, productive land could provide an income during one’s lifetime and could later be transferred to the next generation. In some societies, inheritance of land and the obligation of children to support ageing parents were closely connected. What we now call retirement planning often existed in very different forms: a productive asset was accumulated during the productive years so that it could support the family later.

This brings us back to money. Money is simply the modern form in which we usually perform this act of preservation. You worked for that money. Your time, knowledge, skill and effort were converted into money. When you spend all of it immediately, the entire result of that effort is consumed in the present. When you save part of it, you are saying, in effect, “I will preserve some of what I produced today so that I can use it at some other time.”

And this is necessary because our own income and resource flows are rarely perfectly uniform. Salary may stop during a period of unemployment. Business income may fluctuate. Large expenses may arrive suddenly. Children may need education at a particular age. We may become old and unable to work. Emergencies do not necessarily arrive according to our income calendar.

Saving, therefore, is not about denying ourselves today or simply accumulating money. It is about preserving a part of what we have created today for a time when we may need it more. Just as earlier generations preserved food, water, land and knowledge for the future, we preserve part of our earnings for our own future and for those who come after us. In that sense, saving is nothing more than carrying our efforts forward in time.