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Last updated on October 1, 2025

Money

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Money is the most important and basic means of exchange. We use it in different ways, such as notes, coins, online payments, and cryptocurrency. Learning about money in mathematics helps students improve decision-making skills. It also helps them understand important terms used in different fields like commerce and finance.

Money for US Students
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What is Money in Math?

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 paisa. Money in mathematics includes calculating change, interest, budgeting, understanding taxation, or discounts. Money-related mathematics is essential in fields like finance, banking, and commerce.
 

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History of Money

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 other 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, and 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 includes digital transactions was introduced. Now we use different forms of money like digital transactions, credit cards, cryptocurrency, notes, and coins.

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Properties of Money

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

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Types of Money

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 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 which is 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 and deposits. It exists in the form of digital balances.
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Importance of Money for Students

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

 

Learning this concept will help students understand the importance of saving for emergencies and investing for the future, which will avoid unnecessary debt. Financial literacy helps students 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.

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Tips and Tricks to Master Money

If students want to master the concept of money, they can follow the following tips and tricks to understand the concept 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 expenses like vacations, gifts, and medical emergencies. 

 

Smart Saving: Students can follow the pay yourself first rule, which means save before spending. They must learn to save at least 10% - 20% of their income, no matter how small. 


Avoid Unnecessary Debt: Students must be cautious about student loans and personal loans, as they can accrue a debt. 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 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 saves money. Students can use hand-me-downs as it helps them save too. Students must always remember to compare the prices before buying any commodity; remember to buy something cheaper as it helps you save money. 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 easily. Students can read books related to financial literacy like 'Rich Dad Poor Dad' and 'The Psychology of Money' to understand more about money and savings. They can also follow podcasts, YouTube channels, and finance blogs.

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Real-World Applications of Money

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.

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Common Mistakes and How to Avoid Them in Money

Students tend to make mistakes while handling or understanding money. Here are some of the common mistakes that students make, along with ways to overcome them:

Mistake 1

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Not Tracking Spending
 

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Students must always practice budgeting, they can use free budgeting apps like Mint, YNAB, or even a simple Excel spreadsheet which will help students categorize their expenses. Students must always remember to keep the receipts of the purchases they have made, allowing them to track their expenses. 
 

Mistake 2

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Overspending

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Students should always remember that every penny saved will help them in the future. They can purchase commodities by comparing the prices and buying the better commodity. They can also practice saving at least 10% to 20% of their income, which can be pocket money or money that is earned doing freelance work. Also, they must learn to buy what is needed.
 

Mistake 3

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Ignoring Student Discounts

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Students must remember that they are entitled to certain discounts. For example, when traveling by flight, they have student discounts on tickets. Discount for students is also provided on subscriptions to OTT platforms and music streaming services. Students must research and see where they can avail discounts on certain platforms.
 

Mistake 4

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Eating Out Too Often

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Students must make it a habit to spend less on outside food. They can carry home cooked meals as it helps them save their income. Eating outside food regularly leads to overspending.
 

Mistake 5

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Not Applying for Financial Aid and Scholarships
 

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Students must research for scholarships and financial aids that help them in their school life. They can apply for FAFSA, which is a form for federal student aid. Students must also check with their school's financial office to know more about scholarships and grants.
 

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Solved Examples on Money

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Problem 1

A businessman invests 60% of his money in stocks and 40% in bonds. If his total investment is $10,000, with stocks yielding 8% profit per year, and bonds yielding 5% profit per year, what is his total profit?

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The total profit is $680

Explanation

Step 1: Calculate the amount invested in each:
 

Stocks: 60% of $10000 = $10000 × 0.60 = $6000

 

Bonds: 40% of $10000 = $10000 × 0.40 = $4000


 

Step 2: Compute the profit from each investment:
 

Profit from stocks: $6000 × 8% = $6000 × 0.08 = $480

 

Profit from bonds: $4000 × 5% = $4000 × 0.05 = $200

 

 

Step 3: Total Profit = $480 + $200 = $680.

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Problem 2

A retailer marks up an item by 25% over its cost price and then offers a 20% discount on the marked price. If the cost price is $80, what is the final selling price and the retailer’s profit or loss?

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The final selling price is $80 and there is no profit or loss.
 

Explanation

Step 1: Calculate the Marked Price:
 

Cost Price = $80

Markup Percentage = 25%

Markup amount = 25/100 × 80 = 20

Marked price = 80 + 20 = 100


 

Step 2: The retailer offers a 20% discount on the marked price

Discount amount = 20/100 × 100 = 20

Final selling price = 100 - 20 = 80


 

Step 3: Calculate the profit and loss:

Profit or Loss = selling price - cost price

SP = $80

CP = $80

Profit or Loss = 80 - 80 = 0.

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Problem 3

A person decides to save $200 per month. Every six months, they receive a bonus equal to 50% of a month’s savings. How much money will they save in one year?

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The person will save $2600 in one year.
 

Explanation

Step 1: Understanding the Savings Plan

The person saves $200 per month regularly

Every six months, they receive a bonus equal to 50% of a month’s savings (which is 50% of $200 = $100)

We need to calculate the total savings for one year (12 months)
            

 

Step 2: Calculate the Regular Savings

Since the person saves $200 every month, the regular savings for 12 months will be:

 

200 × 12 = 2400.

 

 

Step 3: Calculate the Bonuses

The person gets a bonus every six months.

Since a year has 12 months, they will receive 2 bonuses

Each bonus is $100, so the total bonus amount for the year is:

100 × 2 = 200.


 

Step 4: Total savings calculation

Now, we add the regular savings and bonuses:

2400 + 200 = 2600.

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Problem 4

Sarah earns $1500 per month. She spends 30% on rent, 20% on food, 10% on transport, and saves the rest. How much money does she save?

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She saves $600 per month.
 

Explanation

Step 1: Calculate the rent
 

Rent = 30/100 × 1500 = $450


 

Step 2: Calculate the food expense
 

Food = 20/100 × 1500 = $300


 

Step 3: Calculate transport expense
 

Transport = 10/100 × 1500 = $150


 

Step 4: Calculate the total expenses
 

$450 + $300 + $150 = $900


 

Step 5: Savings = Income − Expenses
 

$1500 - $900 = $600

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FAQs on Money

1.What are the different types of money?

The different types of money are Commodity Money (gold, silver), Fiat Money (government-issued money), Representative Money (gold-back notes), Digital Money (bank transfers, e-wallets), Cryptocurrency (Bitcoin, Ethereum).
 

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2.Why is money important?

Money is essential for various activities like trade, investments, savings, and economic growth. It allows the people to meet their basic wants and needs and helps them improve their quality of life.
 

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3.How can I manage money effectively?

To manage money, you can create a budget plan, track your daily expenses, save at least 10 to 20% of your earnings, avoid unnecessary debt, and invest wisely for the future.
 

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4.How much money should you save each month?

You can use the 50/30/20 rule, which means 50% for necessities, 30% for wants, and 20% for savings and investments.
 

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5.How can students earn money?

Students can earn money by doing part-time jobs, freelancing (photography, writing, or tutoring), by selling handmade products, or by content creation, blogging, etc.
 

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Dr. Sarita Ghanshyam Tiwari

About the Author

Dr. Sarita Tiwari is a passionate educator specializing in Commercial Math, Vedic Math, and Abacus, with a mission to make numbers magical for young learners. With 8+ years of teaching experience and a Ph.D. in Business Economics, she blends academic rigo

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Fun Fact

: She believes math is like music—once you understand the rhythm, everything just flows!

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