Money is something people use to buy things. Sellers agree to take it in exchange for what they sell. Before money, people used barter. That means trading things you have for things you want, with no money. Barter is slow and hard to arrange, which is why money helped trade. Cowrie shells were a popular form of money in ancient times. People used them across many parts of Asia and Africa.
The shells came from the warm waters of the Indian Ocean, near the Maldives. They traveled far by trade. On the island of Yap, people used huge stone discs as money. A Yap stone could stay in one place when it was spent. The stone did not move. It just changed owner. Early money was often metal, such as silver, gold and a mix of the two called electrum. Commodity money is money that gets its value from what it is made of, like gold or silver.
The ancient Lydians, who lived in what is now Turkey, invented coins. Their first coins were made of electrum. That is a gold and silver mix found in river beds. In Tang-dynasty China, merchants used flying money. It was a paper receipt for money left with local officials. It could be redeemed somewhere else. Merchants did not have to carry heavy strings of coins. Paper money that people could trade with each other began with merchants in Song-dynasty China, around the year 1000.
The first paper money made in the American colonies was issued by Massachusetts in 1690. It was issued to pay for a military expedition. Today, dollar bills are made of cotton and linen, not ordinary paper. The numeral in the lower right corner of a $100 bill's front shifts from copper to green when you tilt the note. Currency is redesigned mainly to stay ahead of counterfeiters. U.S. money today is fiat money. It is not tied to gold or any other asset.
A wage is money an employer pays a worker for the work they do. Some workers are paid a salary, a set amount every week or month, no matter how many hours they work. Money you receive, from jobs, allowances, chores or gifts, is called income. A budget helps you decide how much to spend on needs. It helps you decide how much to put aside for savings. It also helps you choose how much to use for wants.
A bank is a safe place to keep money. Keeping a lot of cash at home is risky because it could be lost or stolen. That is one reason people use banks. As of November 2026, deposits at an FDIC-insured bank are insured to at least $250,000. Money set aside in savings can pay for unexpected costs. One example is a car repair, which might be hard to pay for otherwise.
Words to know
- barter: trading things
- cowrie: small white shell
- electrum: gold-silver mix
- salary: set pay
- budget: money plan
