MODULE-6

PERSONAL FINACIAL
MANAGEMENT
CHAPTER 1 The Basics of Money
 The Basics of Money

• Money can be defined as anything that people use to buy goods and services.

Definition • Money is any object that is generally accepted as payment for goods and services
and repayment of debts in a given country or socio-economic context.

• The main functions of money are distinguished as: a medium of exchange; a unit
of account; a store of value; and, occasionally, a standard of deferred payment.
 The Basics of Money

Money is often defined in terms of the three functions or services that it provides.
Money serves as
Definition
1. A medium of exchange,

2. A store of value, and as a unit of account.

3. A medium of exchange to facilitate transactions.

 The Basics of Money

• In the old days, what people used as money often had value in and of itself.

• For example, some money was made from metals like gold and silver.

• The coins were actually valuable because of the metal they contained.

• A gold coin had a value based on the worth of the gold used to make it.

• Money made of material like gold and silver is said to have value.
 The Basics of Money

• There was actual value in the money itself.

• In the course of history, a variety of things have served as money – gold, cows,
maize, shells, playing cards, and other things in Countries around the world.

• But, in today’s world, what is used as money has become pretty standard from
country to country.

• That doesn’t mean we all use the same money. Ethiopia’s money is different from
money used in Zimbabwe or South Africa.