According to Usability.gov, the purpose of personas is to create reliable and realistic representations of your key audience segments for reference. These representations should be based on qualitative and some quantitative user research and web analytics. Remember, your personas are only as good as the research behind them.
Personas are a great exercise to give the user a face. When you give your target users a name, job, feelings, and struggles, it is easier to develop empathy. Instead of thinking about money or vague goals, you are able to relate to the person you have created.
I have implemented developing personas not only in my Interaction Design courses, but also in my design-based courses in conjunction with mood boards. Along with with user research, it allows the designer to make decisions based on the audience, not on their personal preferences.