What is Money?

We use money to buy things. For instance, if your neighbor needs their car washed, they can pay you money to do it. You can then use the money you earn to buy something you want, like new shoes. By using money, your neighbor got his car washed, you got new shoes, and the guy at the shoe store can buy something he needs.

A World Without Money
Before the world had money, people would trade for things they needed. This is called bartering. If you’ve ever traded your fruit cup for someone’s pudding cup, then you know how bartering works. People would barter with things like chickens, pigs, and rice. As life became more complex, bartering became more confusing. A better way of trading goods was needed.

Money is Born
When money was invented, it was easier for people to get the things they needed without bartering. Each community (or country) could decide what they wanted to use for money and agree on its worth. For instance, a village might use shells as money, and agree that a fish is worth 10 shells and a cow was worth 50 shells.

Money Today
We’re a long way from using shells to buy things, but the idea is the same. Today we all agree on the value of paper money and coins. When someone gives us four quarters, we know that it’s worth one dollar. We can then take that dollar and buy a snack. Now isn’t that a lot easier than trading a chicken for a candy bar?

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