The Role of Money

Functions of Money

Functions of Money

Functions that describe the roles that money plays in an economy including means of exchange, unit of account, store of value, and legal tender.

Unit of Account

A standard numerical monetary unit of measure that provides a consistent measure of value.

Means of Exchange

Money serves as an intermediary in trade, allowing goods and services to be exchanged without bartering.

Store of Value

An asset that can maintain its value over time, allowing individuals to save and later retrieve value.

Legal Tender

Money that must be accepted if offered in payment of a debt; backed by the government.

Expenditure Planning

The process of strategically managing income and expenses to avoid overspending and ensure financial stability.

Interest Rates

The cost of borrowing money or the return on savings, influencing decisions to borrow or save.

Financial Needs Across Life Stages

The different monetary requirements individuals have based on their age and life circumstances.

Consequences of Poor Financial Planning

Potential outcomes of not effectively managing finances, including debt, bankruptcy, and legal action.

Impact of Inflation

The decrease in the purchasing power of money as prices increase, affecting savings and investments.

Why plan Expenditure? (6)

Avoid bankruptcy, Remain solvent, Good-Credit rating, Avoid legal action, Avoid getting into debt and Control costs

What is Expenditure?

is money paid out

How is the Role of Money affected and influenced? (6)

Personal attitude, Interest Rates, Life stages, Life events, Culture, External influences & trends