Free lesson · Lesson 1 in the app
Why Money Matters
What money actually is, why people invented it, and the three jobs it does.
About 8 minutes · 10-question quiz · Ages 10 and up
Learn
Would you swap your phone for a chicken? Probably not. But a few thousand years ago, swaps like that were how people got the things they needed.
Before money existed, if you wanted something, you had to find someone who had it AND wanted what you had. Try buying lunch at school by offering to trade your maths homework and you'll see the problem. It would be chaos.
So people invented money, and it changed everything.
What is money?
Money is anything that everyone agrees has value. It doesn't have to be coins and notes, and for most of history it wasn't.
People have used some strange things as money:
- Giant stone wheels (on a Pacific island called Yap)
- Salt (so valuable that, the story goes, Roman soldiers were partly paid with it)
- Cocoa beans (used by the Aztecs)
- Cowrie shells (used across Africa and Asia for thousands of years)
Today most of our money is digital, stored as numbers on a screen. It still works, for the same reason: everyone agrees it has value.
The three jobs money does
Money does three important jobs that make modern life possible:
1. It lets you buy things easily
Instead of finding someone who wants exactly what you have, you can sell what you have for money, then use that money to buy anything.
2. It stores value over time
You can earn money today and spend it next year. Try doing that with a basket of strawberries.
3. It measures value
Money helps us compare the worth of completely different things. Is a bicycle worth more than a guitar? Money gives us a way to answer that.
Why this matters for you
Understanding money is the first step to making it work for you. Lots of people earn money, spend it, and never think much more about it. Knowing how it works gives you more choices than that.
Once you understand how money works, you can:
- Make smarter choices about spending
- Save for things that matter to you
- Eventually, make your money grow through investing
That last one is what these lessons are mostly about: getting your money to work as hard as you do.
Money is a tool
Like any tool, money is more useful when you know how to use it properly.
A hammer can build a house or just sit in a drawer. Money can grow into a fortune or disappear on things you'll forget about next week.
What makes the difference is knowledge far more than luck, and these lessons are where you start building it.
Practice
No marks here. Have a think, or talk it through, then open a model answer.
The barter problem
Say you're brilliant at baking cakes, but you need a new pair of trainers.
The shoe shop owner doesn't want cake. She wants her car fixed. The mechanic doesn't want cake either, because he wants guitar lessons. And the guitar teacher is on a diet, so she definitely doesn't want cake.
Question: How would money solve this problem?
Think about why we use money instead of bartering (swapping things directly). What makes money better?
Digital money
Most money today is digital: numbers stored in computers. Your parents' pay probably lands straight in their bank account. Nobody hands them a bag of coins.
Question: If digital money is only numbers on a screen, what makes it count as money?
Try the quiz
Pick an answer to see if it's right, and why.
Question 1 of 10
What is the main purpose of money?
Question 2 of 10
Before money existed, how did people get things they needed?
Question 3 of 10
Which of these has NOT been used as money in history?
Question 4 of 10
True or False: Only physical coins and notes count as real money.
Question 5 of 10
What are the three main jobs of money?
Question 6 of 10
Why was bartering (swapping things directly) difficult?
Question 7 of 10
True or False: Something can only be used as money if it's made of valuable metal like gold.
Question 8 of 10
If you earn £20 today but don't spend it until next month, which job of money are you using?
Question 9 of 10
Why does digital money work as money?
Question 10 of 10
Why is understanding money important for investing?
10 questions. Nothing is saved, so have a go.
Where a lesson mentions another lesson by number, the free ones are linked. The rest are in the app.
Keep going in the app
In Squids-In, children work through 160 short lessons like this one, in order, alongside a friendly investing game. You can see how they're getting on. It's free while we test it with a small group of families.