Money is everything that serves as a universally accepted medium of exchange or means of payment. Money gives value to nearly everything.
- a) History of money
- b) Currencies in the UK and USA
- c) At the bank
- d) Public finance
- e) Methods of payment, internet banking
- f) Your attitude to money
a) History of money
Money has not always been in the same form as it is today, and it is still developing. Before money, people used a barter system to exchange their products. Livestock, particularly cattle, and plant products like grain, came to be used as money in many societies at different times. The earliest form of banking was developed in Mesopotamia (around 2000 BC) when temples were used to store grain and other valuables for trade. Early societies used various commodities that were commonly accepted in trade. Items included cacao beans by the Aztecs, salt („salarium“) for Roman soldiers, and tobacco leaves or animal skins by early U.S. colonists. Human slaves were also used as currency. Gradually, people began exchanging items with no intrinsic value, like cowry shells, which were used mainly in Africa and Asia. Cowry shells are the longest-used currency in history. Paper money was first issued in China in the 7th century.
b) Currencies in the UK and USA
Currency in the UK is the pound. Notes are called pounds, and coins are called pence (1 penny, 2 pence). The banknotes feature Queen Elizabeth II.
Currency in the USA is the dollar. The term „dollar“ originates from „thaler,“ the name of the first minted coins in Bohemia in 1520. Banknotes are called dollars, and coins are called cents. All banknotes are the same size, with U.S. presidents depicted on the front and images of the Great Seal or famous buildings (like the Capitol or Washington Monument) on the back.
In 1999, a monetary union was created, and the Euro was introduced.
c) At the bank
A bank is an institution that deals with money and provides financial services, buying and selling money for profit. To use a bank, you must open an account. There are various types of bank accounts:
- Current account: Requires a deposit and is used for payments by debit card and bills. It has low interest, and you can withdraw money from ATMs.
- Saving account: You deposit money regularly (e.g., monthly) and can withdraw it after a set period (e.g., 5 years). This account has higher interest than a current account.
- Joint account: Used by multiple people.
ATM withdrawal process:
- Insert your card.
- Select a language and enter your PIN.
- Press the withdraw cash button.
- Choose the amount to withdraw.
- Take your card and cash.
d) Public finance
The government collects money through taxes, which include:
- VAT: Included in prices.
- Income tax: Deducted from salaries.
- Inheritance tax: Paid on inherited assets.
- Customs duties: Fees paid on imported goods.
- Unemployment benefits: Funds provided to registered unemployed individuals.
- Pension benefits: Payments to retirees.
If you lack funds for a purchase, you can take out a loan, which is repaid in installments with interest. A mortgage is a long-term loan secured by real property. If you fail to repay, the bank may take possession of the property. Hyperinflation can occur when everyday items‘ prices skyrocket, leading to currency devaluation.
e) Methods of payment, internet banking
Payments can be made in cash or by card. The history of credit cards began when Frank X. McNamara forgot his wallet while dining out. This realization led to the need for a universal payment card.
There are two main types of payment cards:
- Credit card: Money spent is a loan to be repaid later, usually with interest.
- Debit card: Money is deducted directly from your bank account.
Advantages of card payments: You can pay without cash, block lost cards, and make quick contactless payments. Disadvantages: Some shops may not accept cards, and cash transactions encourage more mindful spending.
Internet banking: Allows access to accounts via a computer. Advantages: You can transfer money and check balances from anywhere. Disadvantages: Losing devices with bank access can lead to theft.