Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context —Wikipedia, ‘Money’
Money in its present state is the end result of a change from the Trade by Barter dating back to 100,000 years to the development by many cultures, a form of exchange. Cowries were used in many countries as a form of exchange, followed by the use of Gold and silver around 300BC. These metals are heavy to carry hence promissory note, that were equivalent to the gold value were used as a form of exchange. Paper money, or banknotes, was reportedly first used in China in the seventh century. They were used alongside the promissory notes and coins. Banknotes were first issued in Europe in Sweden by Banco Stockholm in 1661 and were used alongside the coins and promissory notes. The gold standard as a monetary system where the medium of exchange are paper notes that are convertible into pre-set, fixed quantities of gold, replaced the use of gold coins as currency in the seventeenth to nineteenth centuries in Europe. These were made legal tenders, and people were discouraged from redeeming them into gold coins. All countries had adopted the gold standard paper notes by the beginning of the twentieth century. After the Second World War and the United Nation’s Bretton Woods Conference, held in July 1994, most countries adopted fiat currencies that were fixed to the United States Dollar. The US dollar was in turn fixed to gold. Each country has its Money,which functions as a mode of exchange, a common measure of value (a unit of account), a standard of value, and a store of value (can be saved, stored, and retrieved). Money is an essential commodity/tool needed in everyday life and has evolved into the electronic age where you may not need to carry coins and paper notes about. You only need a plastic card. Money is now moved across the world electronically.
Human beings need money to pay for all things that make our lives possible, such as shelter, food, healthcare bills and a good education. Money therefore needs to be understood and managed well throughout life. We are consciously and subtly being bombarded by the need to have money, to borrow if you do not have, to buy now and pay later. We enhance our status by buying the latest model of a gadget or phone. These are subtle cues as to how money can have a big effect on our decisions and our behaviour. Children need to be taught at an early age(from the home) and in school about money and its management.
Basic Principles
- Money is a vital commodity for living. It has to be managed carefully.
- There is no easy money. Money has to be earned by hard work. Any other way of earning quick money is not right. Hard work is required to create wealth. Wealth does not come overnight, but is a product of hard work and effective use of money.
- The education about money should be done well before they transition from parental dependence for money, to actually earning and managing their money.
- Parents should discuss money and the principles of money management with their children. Teach them to save a proportion of their pocket money and monetary gifts that they get. Teach them the difference between needs and want, between income and expenditure ,assets and liabilities and demonstrate this by your own examples and attitude to money.
- Money must be managed and spend wisely. The principles of Income and expenditure and of Assets and Liabilities must be grasped. Judicious use of money at personal, corporate and national levels must be taught.
- Income is all types of money that a person earns from work and business monthly after taxes. Expenditure is what you spend monthly for rent, transport, bills, food and other essential living activities. The aim is to have a disposable income –This is money left when you take expenses from your income (Income minus Expenses =disposable income) If Expenditure (what you spend) is more than you earn, you are in debt, and the debt will increase monthly.
- Never take a loan to offset debts, you end up paying more. Review faithfully what come in and what you spend and cut down on your spending. Alternatively increase your income.
- Assets are items of property or investment owned by an individual or company regarded as having value and available to meet debts, commitment or legacies. Examples are a house. Land, jewellery. (In short what puts money in your pocket)
- Liabilities are financial obligations a person or organisation must meet such as mortgages, loan payment car maintenance. In short what takes money out. Prudence is required when spending money on goods which depreciates in value over time. An expensive car bought to impress will end up costing more to maintain.
- A person who understands and applies money management principles in their lives will be safer managing public money.
Laziness and indolence are two main factors to fuel poverty level.
Attitude towards money may be influenced by upbringing, the society and its values. And education.
Money is not evil but ‘the love of money’ is. The society that values a man by the amount of money that he has, rather than his contribution to society is heading for trouble.
Beware of the pressure ‘to belong.’ Copying or doing what others are doing puts a strain on your finances. Prioritize needs not wants. Or when some societies demands ‘what is expected of a man of your status’ Learn to say NO when pressure is on you to spend above your means. Learn to be happy and content with what you have. Pursue your aim to improve your finances and status over time.
To avoid over spend it is worth asking yourself some questions a) Do I need this? A need is a necessity (Rent, mortgage utility bills,food and transportation) A want is something that you wish to indulge in and which you save up to buy. b. Is there a way I can save money by buying this somewhere else? Be persistent in your search. Buying a branded product is usually more expensive. Equally good non branded products are available. c. Do I have money to cover this? Do not make purchases unless it is in your budget. If it is not, then save money until you can buy it. d. Is there anything else I can do with this money? Pay Credit card bill? or put it in your emergency fund
It is worth doing a Financial review and long term planning with a Financial adviser. At least do a true income and expenditure (outgoing) spread sheet to determine how to cut back expenditure so that you have (or improve) your disposable income.
‘Spend, save, invest and be a philanthropist ‘
Money or wealth is meant to be used for the good of others. It does no good in the Bank. (you are blessed so that you can bless others) (Deut8:18) Aim to avoid Debt and not exceed your budget. It is easy to overspend Take stock and Beware of money wasters such as
1Bank fees. 2. Insurance that you don’t need.eg some breakdown insurance 3. Late fees on credit cards. They also hurt your credit rating. 4 .Ghost Subscriptions. Easy to set up and easy to forget and cancel. They are worth cancelling if you are not an active user. 5. Credit card interest. These are high and cumulative if you don’t pay off the balance at one go. 6. Pilot lights on appliances. It is estimated that up to20% of your energy bills are due to these energy suckers. 7. Thermostat. You can save money on heating bills by lowering your thermostat by 1degree. 8. Food waste. To avoid food waste do the recommendation of the UNFAO 15 quick tips for reducing food waste and becoming a Food hero | FAO Stories | Food and Agriculture Organization of the United Nations 9. Investment fees. Seek financial advice. Keep them under 2% or they eat into your long term investment earnings. 10 Extended warranties. Read the fine prints see what the manufacturers cover and what common problems the extended warrantees exclude. 11.Save fuel cost by maintaining your car. Drive at the correct tyre pressure. 12. Unclaimed tax deduction, benefits etc.
About Money. Subtle cues to money can have that big of an effect on our decisions and our behaviour -Research has proven this. It turns out that merely thinking about money makes people more apt to engage in unethical behaviour like lying, cheating and stealing, according to researchers. Thinking about and putting money above all things drives a person to corruption and may lead to a callous attitude. The pursuit of wealth can be an addictive behaviour. Financial Probity is essential in personal as well as in professional commercial and political life.
‘The way you spend your time and money are direct reflections of your values’