Money

In mathematics, money is seen as a concept that exercises practical applications of arithmetic and number operations. It is like telling the students the importance of four basic mathematical operations: Addition, subtraction, multiplication, and division.

Money is measured and valued using different units like dollars, euros, rupees, etc. The smaller denominations are measured using units like cents or paise. Money in mathematics includes calculating change, interest, budgeting, understanding taxation, or discounts. Money-related mathematics is essential in fields like finance, banking, and commerce.
 

The concept of money has been in existence since ancient civilizations. Way before money was introduced, people used the barter system for transactions. These transactions involved exchanging goods and inventory for better goods and services.

As the barter system was being extensively used, there were some problems that occurred, after these problems arose people then used commodity money like shells, salt, precious metals which included gold and silver. The minting of the first metal coins dates back to around 600 BC in Lydia, present-day Turkey. Later, during the Tang dynasty in China, paper money was introduced. In the 17th century, banks in Europe started issuing notes, which led to the development of modern banking systems.

Now in recent times, after the development of the internet, online banking that included digital transactions was introduced. Now we use different forms of money like digital transactions, credit cards, cryptocurrency, notes, coins, and even a

Money has various properties and learning about them can help us understand how money works. Some properties of money are mentioned below:

Durability: Money, in the form of paper, must be able to withstand wear and tear overtime. In many countries, paper money is still considered good enough even if there is minor wear and tear.

Portability: One of the properties of money is that it can be easily carried around and transferred from one person to another.

Uniformity: Uniformity brings standardized transactions into the picture. Minting money of different denominations allows easy flow of transactions.

Limited Supply: If the money has to maintain its value, the money that is being minted must not be produced in excess. If produced in excess, it decreases the value of the currency, thus leading to inflation.

Acceptability: If money has to be called money, it has to be accepted everywhere as a medium to exchange goods and services. 

If the students learn these properties, they will understand the concept of money and how to use them.

Money can be classified into various categories. Learning them will help students understand the differences and use them efficiently. Types of money are mentioned below:

Commodity Money: Commodity money is the money that has an intrinsic value to it. Commodity money includes commodities like gold, silver, or other valuable materials.

Fiat Money: Fiat money means the money that is government issued. This type of money does not have any intrinsic value but is accepted as a legal tender, for example, paper money and coins.

Digital money: After the introduction of the internet, money no longer needed to be only physical in nature. Direct transfer of money from one bank account to another made electronic transactions possible. This paved the way for online transactions and digital wallets.

Representative Money: This type of money is backed by a commodity, like gold or silver, but it is not made by using the commodity. For example, gold-backed certificates.

Cryptocurrency: Money that is decentralized and is digital is called cryptocurrency. Cryptocurrency is secured by cryptography. Some types of cryptocurrency are Bitcoin and Ethereum

Fiduciary Money: This refers to a type of money accepted based on trust. The transaction is done between two trusted parties, the payer and the payee. The money is accepted as a medium of exchange and is not recognized as legal tender by the law. 

Commercial Bank Money: This type of money is the money that is created by banks through lending and borrowing, deposits, and exists in the form of digital balances.

The concept of money is important and essential for students, as it plays an important and crucial role in their daily lives and future financial well-being. If the students learn how to manage money, it will help them in developing their budgeting skills and differentiate between their wants and needs, and also help them cultivate a responsible attitude in spending.

Learning this concept will also help the students the importance of saving for emergencies and investing for the future, which will avoid unnecessary debt. Financial literacy helps the students to make well-thought-out decisions about personal expenses and career choices. If the students understand this concept early on, it will help them gain independence, discipline and financial security and prepare them for long-term success.

If the students want to master the concept of money, they can follow the following tips and tricks to understand the concept of money better:

Budgeting and Money Management: Students can start tracking their income and expenses to understand where the money is going. Money can be managed by following the 50/30/20 rule. The rule is to reserve 50% of our total income for our needs, 30% for our wants, and 20% for savings and investments. Students must learn to plan their irregular expenses like vacations, gifts and medical emergencies.

Smart Saving: Students can follow the pay yourself first rule, which means save before spending. The students can also set a savings goal for their immediate expenses. They must learn to save at least 10% - 20% of their income, which can be pocket money, no matter how small. 

Avoid Unnecessary Debt: Students must be cautious about student loans and quick small personal loans as they can accrue a debt there. Students must always understand that there is going to be an interest rate whenever they borrow money from instant loan apps, and it will bring them more debt if they do not pay their EMIs on time.

Smart Spending and Frugality: Students must be a little wise when it comes to spending their money, they must use student discounts on food, transportation, and subscriptions. Instead of spending outside on food, students can practice eating home cooked meals as it is money saved. Students can use hand-me-downs as it helps them to save money there too. Students must always remember to compare the prices before buying any commodity, always remember to buy something cheaper as it helps you save money. Remember, every penny saved will help you in the future.

Financial Literacy and Mindset: As long as the students have financial literacy, they will be able to understand the concept of money very much easily. Students can read books related to financial literacy like Rich Dad Poor Dad, The Psychology of Money to understand more about money and savings. They can also follow podcasts, YouTube Channels and finance blogs.

There are many real-world applications of money as it is widely used. Let us now see the different applications of money and where money is used:

Buying and selling Goods and Services: We use money for everyday transactions like to purchase food, clothing, transportation, entertainment and other goods and services we want or need. Businesses also use money to buy raw materials, pay their employees and sell their products and services.

Measuring Value: We use money as a common unit of account to express the value of goods and services, which makes it easier to compare prices and make purchasing decisions. Money is also used to measure economic activity like GDP, inflation and unemployment.

Saving and Investing: We use money for future goals like education, retirement or down payment for a house, vehicle, etc. We also use money to grow our wealth like investing in stocks, bonds, real estate and other assets that will increase our wealth in the long run.

Paying Debts: We use money to pay our debts like loans (student loans, vehicle loans, mortgages) or credit card bills. Businesses also use money to pay their suppliers, creditors and other obligations that they have.

Charitable Giving: We use money to support causes like NGOs that support the causes that we believe in. Wealthy individuals and businesses use money to fund initiatives that benefit the society.