“People cannot be united in any religion, whether it be true or false, unless they are brought together through a common sharing of some visible signs or sacraments; and the power of these sacraments is so effective that scorning them is considered sacrilegious.”

St. Augustine

The term “sacrament’ comes from the Latin word sacramentum. In pre-Christian times, a sacramentum was a pledge of money or property which was deposited in a temple as part of a lawsuit or contract. A sacramentum was forfeited when one lost the suit or broke the contract. It later became also an oath of allegiance made by soldiers to their commanding officer and the gods of Rome. In both of these cases, the sacramentum involved a religious ceremony in a sacred space.

Christian writers in the Early Church borrowed the term to talk to their Roman contemporaries about the process of Christian Initiation. These early writers, when describing the ritual of Baptism, referred to it as a sacramentum wherein people began a new life of service to God. By the time of Augustine in the fifth century, any sacred ceremony was referred to as a sacramentum.
Augustine even defined the word as “a sign of sacred reality.” Christian usage of the word became more restricted and by the twelfth century it applied only to the seven church rituals that we today call the seven Sacraments.

Today when you hear about sacraments the seven sacraments come to mind.  Why do we have these sacraments?  The Church clearly gives a purpose of having the sacraments.  "The purpose of the sacraments is to sanctify men, to build up the Body of Christ and, finally, to give worship to God.  Because they are signs they also instruct.  They not only presuppose faith, but by words and objects they also nourish, strengthen, and express it.  That is why they are called 'sacraments of faith.'" (CCC no. 1123)  The sacraments presuppose faith because they are from the Church and were founded by Christ.  The Church's faith was before the believer coming forth.   When the Church celebrates the sacraments she confesses the faith of the apostles. 

"The seven sacraments are the signs and instruments by which the Holy Spirit spreads the grace of Christ the head throughout the Church which is his Body.  The Church, then, both contains and communicates the invisible grace she signifies.  It is in this analogical sense, that the Church is called a "sacrament."  (CCC no. 774)  Through the seven sacraments, Jesus becomes alive and active within our lives. As Catholics we celebrate the presence of Christ in the Word of God, in the observance of sacred liturgies and rites, in hymns, in religious art and even in one another. But, nowhere do we celebrate the presence of Christ among us more completely than in the sacraments.

Sacrament:  An efficacious sign of grace, instituted by Christ and entrusted to the Church, by which divine life is dispensed to us by the work of the Holy Spirit.