Precautionary savings occurs in response to uncertainty regarding future income. The precautionary motive to delay consumption and save in the current period rises due to the lack of completeness of insurance markets. Accordingly, individuals will not be able to insure against some bad state of the economy in the future. They anticipate that if th...
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http://en.wikipedia.org/wiki/Precautionary_savings
Savings accumulated by an agent to prepare for future periods in which the agent's income is low. Contexts: models; finance
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http://www.econterms.com/glossary.cgi?query=precautionary+savings
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