Saving and borrowing allow intertemporal consumption. Basically, you move your consumption from one time period to another. If you do not spend all your income in year one, your savings can increase your consumption in later years. On the other hand, if you spend more than your income in year one (by using credit cards or taking out a personal loan), you must consume less than your income in subsequent years to pay back your debt. As the prime example of this, saving money for retirement each year means you are consuming less currently in order to have money for retirement. However, you are also earning interest or dividends that will allow you to consume even more than the original amount when you reach retirement.
Dr. Franco Modigliani, Nobel Prize winner in economics, explains our consumption and saving decisions over a lifetime with the life cycle hypothesis. Until college graduation, when we have student loans, we are dissaving; that is, we are consuming more than our income and financing it with student loans. After we begin our career, we consume less than we earn because we are saving for retirement. Finally, when we retire, we are once again dissaving by spending the retirement savings we have built up.