What is a possible consequence of not having savings in reserve before making significant purchases?

Not having savings in reserve before making significant purchases can indeed lead to difficulty in covering unexpected expenses. When individuals don't maintain a savings buffer, they may find themselves unprepared for unforeseen costs that can arise, such as medical emergencies, car repairs, or urgent home maintenance. Without these savings, individuals could be forced to rely on credit, leading to debt or financial strain, especially if the unexpected expenses arise shortly after a major purchase.

On the other hand, maintaining savings allows for a safety net that helps manage cash flow effectively. It assists in ensuring that essential and unexpected costs are met without derailing one’s financial stability. This aspect emphasizes the importance of prudent financial planning and highlights the risks associated with inadequate savings before making large financial commitments.