Peoples hold money/ cash for the three (3) following reasons/ motives:
1. Transaction Motive
Peoples keep cash for the transaction motive. Everybody maintains cash balance to meet the daily transaction to pay to creditor, to buy goods, pay rent, to invest on business etc.
2. Speculative Motive
Some hold money the speculation purpose. Speculator always searches the project to invest money temporarily so that makes huge profit immediately. A speculator always maintains a cash balance to get the speculation benefits.
Future is always uncertain, so everybody maintain a cash balance for the future uncertainty. Increase of business or individuals, all’s future is uncertain, so they keep cash to meet the future uncertainty.