Why do we value money? Detailed answer

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Why do we value money? Detailed answer

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Why do we value money?

The idea of using money is truly wonderful! But many do not know who came up with the idea to use money and why we value it.

Thousands of years ago, money was not used. Ancient man had barter deals. This meant that if he wanted to buy something that he could not produce himself, then he had to find a person who had the appropriate product. He had to offer something in return, and if that person did not need his goods, the ancient man was left without the thing he needed.

Over time, certain items began to be used as money, as almost everyone wanted to acquire them. For example, cows, tobacco, grains, skins, salt and beads served as money, as people willingly accepted them.

Subsequently, these goods were replaced by pieces of metal. Gold or silver was often used. Later, coins began to be made from metal of a certain purity and weight. They represented a certain number of goods. Several coins represented one cow, or 10 kg of tobacco, and so on.

Today we have paper money and coins at our disposal. They are issued by the government and all people accept and use them. So why do we need money? Why do we value them? We can do four important things with money.

First, with the help of money we can exchange and trade. Suppose you want to buy a bicycle, and even agree to earn some money, at least mowing the lawn. But whoever you mow the lawn for doesn't sell bikes. He only pays you the money that you take to the store and buy yourself a bike for them. With money, you can exchange your labor for anything.

Secondly, money is a measure of value. This means that they can be used to compare the value of different things. You are going to mow lawns for £1,5 an hour. The bike costs 50 pounds. You have an idea of the value of a bicycle compared to the value of your labor.

Third, money is a store of value. You will not be able to store the harvested tomatoes for a long time, because they quickly deteriorate. But if you sell them, you can save the proceeds for the future.

Fourth, money serves as the basis for future payments. You deposit £10 for the bike and promise to pay the rest later. You will not pay the seller with tomatoes, eggs or soccer balls. You agreed with the store owner that you will bring the rest of the amount later. You use the money for subsequent payments.

Author: Likum A.

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