Money is something people use to buy things. Sellers agree to take it in exchange for what they sell. Before money, people used barter, which means trading things you have for things you want, with no money. Barter's trouble has a name: the double coincidence of wants. A trade only works when both people have something the other wants. Barter also lacks a standard unit of measure, so setting the terms of a trade is hard. Money solved many of barter's problems.
Good money is portable, divisible, durable, scarce, acceptable and stable in value. People have used cattle, cacao beans, grain and giant stones as money. Metal money was easy to carry and could be measured out in exact amounts, but it had to be weighed every time. For a long time China's basic money was a bronze or copper coin with a hole in the middle for stringing.
Cowrie shells were money too. Bronze objects from China made around the 13th century BC show cowrie shell designs, a sign the shells were valued as money. The oldest written evidence of cowrie shells being used as money was found in China. Cowrie shells came from the warm waters of the Indian Ocean, near the Maldives, and traveled far by trade.
The ancient Lydians, who lived in what is now Turkey, invented coins. Around 630 BCE, someone in Lydia stamped a piece of precious metal with a mark, which made people trust its weight and purity. By about the middle of the sixth century BCE the Lydians were making pure gold coins with a design on one side.
In China, large payments were counted in strings of coins, but the strings were too heavy to carry far. Paper money in China began when merchants traded receipts from deposit shops instead of carrying heavy strings of coins. People in China made the first paper money, about a thousand years ago. The first paper money made in the American colonies was issued by Massachusetts in 1690, to pay for a military expedition.
According to U.S. government history, the United States officially adopted the dollar sign in 1785. The symbol grew out of the Spanish American figure for pesos. Congress set up the U.S. coinage system with the Mint Act on April 2, 1792, and adopted a decimal system for money. The term greenback was first used for the 1861 Demand Notes because of their green ink. The U.S. Mint is the only maker of the nation's coins, and the Bureau of Engraving and Printing is the only maker of its paper money.
A bill weighs about one gram, whatever its value. It can be folded back and forth about 4,000 times before it tears. A bill can stay in use for years. As of November 2026, the Federal Reserve estimates a $1 bill lasts 7.2 years on average. Green was kept as the color for the backs of bills in 1929 because the ink was easy to get and held up well. As of November 2026, the $100 bill is the highest-value U.S. bill the Federal Reserve currently issues.
A $100 bill has a blue 3-D ribbon where tiny bells change to 100s as you tilt the note. The ribbon is woven into the paper, not printed on it. The bill also has a thread inside it that shows USA and 100 when held to light, and glows pink under ultraviolet light. A faint watermark portrait can be seen from both sides when you hold the bill up to the light.
Money you put in a bank is called a deposit. A savings account pays interest on the amount you deposit, called the principal. As of November 2026, the FDIC says no depositor has lost a penny of FDIC-insured money since it was established in 1933. Not all banks are protected by the FDIC, so a saver should check that a bank is FDIC insured.
Income is the money you get from jobs, allowances and gifts. Expenses are what you spend on needs and wants. When you subtract what you spend from what you earn, the money left over can be saved. A job is short-term work for money. A career is the kind of work a person does for most of their life.
A need is something you cannot live without, like clothes. Resources are limited, so people cannot have everything they want and must choose some things and give up others. Wants are unlimited, so people have to make choices. Opportunity cost is whatever must be given up to get something else.
Words to know
- barter: trading goods
- durable: lasts long
- deposit: money put in
- principal: amount deposited
- watermark: faint hidden picture
