What is one reason people hold money for precautionary motives?

People hold money for precautionary motives primarily to have funds available for emergencies. This reflects a fundamental aspect of financial planning and risk management. Individuals often face unexpected events such as medical emergencies, job loss, or urgent repairs that require immediate cash. By keeping liquid assets on hand, they can quickly address these situations without needing to resort to loans or selling investments, which might not be feasible or advantageous at that moment.

Holding money for precautionary reasons allows for greater financial security and peace of mind, knowing that one is prepared for unforeseen circumstances. In contrast, options like investing in profitable opportunities or facilitating business expansion focus on using money to generate income or achieve growth, rather than preserving it for future uncertainties. Contributing to charity, while noble, is not related to the need for immediate access to funds in times of crisis.