Sacraments are outward signs of inward grace, instituted by Christ for our sanctification.
The Latin word sacramentum means "a sign of the sacred." The seven sacraments are ceremonies that point to what is sacred, significant and important for Christians. They are special occasions for experiencing God's saving presence. That's what theologians mean when they say that sacraments are at the same time signs and instruments of God's grace.
If you learn more about the sacraments, you can celebrate them more fully. To learn more about the individual sacraments, please follow the links provided.
In every sacrament three things are necessary: the outward sign; the inward grace; Divine institution. A sign stands for and represents something else, either naturally, as smoke represents fire, or by the choice of an intelligent being, as the red cross indicates an ambulance. Sacraments do not naturally signify grace; they do so because they have been chosen by God to signify mysterious effects. Yet they are not altogether arbitrary, because in some cases, if not in all, the ceremonies performed have a quasi-natural connection with the effect to be produced. Thus, pouring water on the head of a child readily brings to mind the interior purification of the soul.
The word "sacrament" (sacramentum), even as used by Latin writers, signified something sacred, viz., the oath by which soldiers were bound, or the money deposited by litigants in a contest. In the writings of the Fathers of the Church the word was used to signify something sacred and mysterious, and where the Latins use sacramentum the Greeks use mysterion (mystery). The sacred and mysterious thing signified its Divine grace, which is the formal cause of our justification (see GRACE), but with it we must associate the Passion of Christ (efficient and meritorious cause) and the end (final cause) of our sanctification, viz., eternal ife. The significance of the sacraments according to theologians (e.g. ST III:60:3) and the Roman Catechism (II, n.13) extends to these three sacred things, of which one is past, one present, and one future.
The three are aptly expressed in St. Thomas's beautiful antiphon on the Eucharist: "O sacrum convivium, in quo Christus sumitur, recolitur memoria passionis ejus, mens impletur gratia, et futurae gloriae nobis pignus datur -- O sacred banquet, in which Christ is received, the memory of the passion is recalled, the soul is filled with grace, and a pledge of future life is given to us".