You have definitely heard about and likely used money in your life before. Often, parents start teaching their kids how to use money at an early age. But not everyone gets to learn how to accumulate and grow this money through investing. Maybe you already know all the basics, which we will start with here, so it will be easy for you to understand. However, we want to make this learning journey as comprehensive as possible.

What is money?

Money is what we use to buy and sell things. It makes trading and doing business much easier. It can come in different forms, like coins, paper bills, and even digital currencies that exist only online.

The Evolution of Money

1. Barter System: A long time ago, people didn’t have money. Instead, they traded goods and services directly. For example, someone might trade a basket of apples for a loaf of bread.
2. Commodity Money: Later, people started using items that had value, like gold and silver, as money. These items were valuable because they were rare, and people wanted them.
3. Fiat Money: Today, we use paper money and coins that don’t have much value on their own. They are valuable because the government says they are. This is called fiat money. Cryptocurrency and other digital currency, for example, are also fiat money.
   
   

The Functions of Money

1. It serves as medium of exchange
   Money facilitates trading as it makes it easy to buy and sell things because everyone accepts it as payment.
   
   
2. It is a unit of account
   Money helps us put prices on things, making it easy to compare the value of different items. For example, you can see that a book costs $10 and a sandwich costs $5.
   In addition, it becomes easier to keep track of how much you have, how much you spend, and how much you owe. This helps with budgeting and financial planning.
   
   
3. It stores value

Money enables you to save for the future. This means you can defer your consumption today to spend it later. For example, you might save up to buy a new phone or pay for college.