I'm not afraid of the Big Bad Money

DOLLAR$ and $EN$E, December 2007, by Brian Bogaert


I’m not afraid of the
BIG BAD MONEY


Hey everyone, we’re back with more tips on money and I want to share a tip sent in from Emily in Bozeman regarding our last money article: “Before you go shopping plan out a limit of money that you can spend so it will keep you in check, if you have a budget of $100 you won’t spend half of it on one pair of jeans…” That’s a great way to keep your Needs and Wants under control, thanks Emily!
 
In this article we are going to talk about the monetary system in Canada and the world to better understand Money. I promise to do my best to spice it up a bit so you don’t feel like you’re falling asleep in math class. Is that a $50 bill on the floor??!!! See.
  
What Is Money?
Money is often described as currency. There are many types of currency all over the world, for different countries; like Francs, Pounds, Baht, Rupees, etc. In Canada and the U.S., we use dollars $. Different currencies are valued at different amounts in the world and when you compare them, it can get pretty confusing.   For example if you go to Thailand and exchange 1 Canadian Dollar you would get 28.5 Thai Baht (at the time of writing – currencies change value every single day). In some countries, when I checked my bank balance, I was literally a multi-millionaire (because of the currency exchange in that country)!!!
  
Other Types of Currency
The one thing countries do agree on is using some kind of currency, usually in the form of paper money and coins, to pay for things (like food, clothing, services, camel rides…). It wasn’t always like this. In early human civilizations, people used to exchange things for things. You may go to market (olden days Mall) with a chicken and want to exchange for cloth so you could make your own clothes. You may grow some kind of food like perhaps corn and you would exchange that for a horse or cow. This went on for thousands of years…and as you can imagine it was rather difficult to transport all of that stuff and just ‘go shopping’ (Mom…how many bushels of corn do I need to get a new skirt??!).

tradesEventually people started to trade things like precious metals and stones that had a value associated with them. Gold was very popular for this (and still is today). Everyone could agree that 1 ounce of pure gold was worth a certain amount, so that could be traded for other goods of the same value. It was also a lot easier to carry things like gold or jewels or silver than corn or chickens. About 500 years B.C. (Before Christ), a king in Lydia, an area now considered to be Turkey, started to make coins out of gold to be used in buying and trading. Gold became the standard ‘money’ (along with silver) for more than 2000 years. (Wikipedia Free Online Encyclopedia)

Paper Money
It was only in the 20th century that we stopped using gold as the standard to value money. In fact, even paper money was really a representation for gold. A $5 bill was actually a representation of $5 worth of gold. Not any more. The strange thing about money now is, it isn’t actually a representation for anything real. It’s like handing someone any old piece of paper and saying ‘this is worth $20’ and they just believe you. The reason that works is you can then take that piece of paper to a bank and they will also accept that it is worth $20. The really weird part is, if you think about it, it’s all in everyone’s imagination (because a piece of paper is just a piece of paper). The only thing that makes it real is our Government says so and we all choose to believe it.

So we have agreed as a society to allow people to exchange things of value (food, water, shelter, entertainment) for money. And since most money is paper, I like to point out that money DOES actually grow on trees!! The system does work pretty well so we’ll keep it.

The thing to remember about all this is:

Money Tip #5
The monetary system used in a country is really just made up. It is based on the principle that everyone believes it and sticks to the rules. Paper money is a representations of value to be used in exchange for other things.

If you can remember this and truly understand it, you will start to have power over money. Do you remember when you were afraid of monsters under your bed (and perhaps you still are as some nights I am)? Well the day you realized that monsters were just made up, and not real, was the day you learned to control those monsters and not be so afraid of them anymore. Money is a lot like monsters under your bed. Realize it isn’t truly real, that you can control it, and all of a sudden you won’t have to be afraid or worried by it anymore.

NOTE: No camels or corn were harmed in the making of this article!

~ Brian Bogaert

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