What is money?

Everyone needs, wants and uses money.

It is what people must have to buy something from another person or company who is selling it. A simple way you can think about money: the coins and banknotes which you use in exchange for items you want.

Money also exists in electronic format. People don’t have to give coins and notes to buy something. They could also send money to another person using the internet, or pay in a different way – like a credit card, debit card, or cheque.

Where does it come from?

Money gets created in each country by the Central Bank of that country.

This is an institution (a type of financial company) whose job is to look after the financial / banking services for the government and all other banks.

This includes various tasks all relating to helping to control and manage money – called the “money supply”.

How can I get money?

There are many different ways in which people can get money.

The most obvious and common one is getting a job. This involves working to earn a salary, or pay, at the end of a week or month.

People also earn money by inheriting it. This means that when someone has passed away, individuals who were close to the deceased person will be left money and items belonging to the deceased, as stated in a will.

Knowing how you get money is very important because at some point, your mum and/or dad will stop giving you money to buy the things you want. You will then need to source money on your own.

What can you do with money?

There are only a few things you can do with money, as outlined in the introduction: Spend it, Save it, Invest it, and Give it away.

  • Spend it – budgeting, spending wisely, and taxes
  • Save it – saving, and the role of banks (including borrowing /lending)
  • Invest it – setting your goals, investing, how insurance works, fees and retirement
  • Give it away – charity and philanthropy

Why is money important?

If money did not exist, then people would need to exchange other things with each other to get what they wanted. This is called barter.

But this does not work well in many cases. This is because, for every item someone wanted to buy, they would need to find someone with that item and then give that person something they also wanted.

For example, a person who can fix cars will want food. But to get food, they will need to find someone who has food and also has a car which needs to be fixed!