Money: What is it? What are the characteristics?

Money is the return for the work or service provided by a person. For many, money means power though money is a medium of exchange in the form of coins and notes.

There are many countries in the world. But, you have seen the prominence of certain countries in world matters. What makes them the leaders of world is nothing but money power. In everyday life too, the single most aspect that bothers a normal human being is the worry about money; how more money can be generated to have a better life.

What are the characteristics of money?

The main characteristics are
• Money is a medium of exchange evolved over a period of time replacing the barter system.
• It is an economic good that is acceptable in lieu of any good or service
• Money is a yardstick for comparison of economic value of a product or service.
• It is power that enables anybody capable of buying everything available for sale.

But in modern world, money has become the reward for innovative thinking, ideas and skillful execution of the ideas into workable solutions. Those who have innovative ideas and capability to convert them into realities earn huge money in no time.

How can money be created?

The various methods by which money can be created are
• Selling your time for useful service for others
• Selling the products and goods manufactured by investing your time.
• Selling your ideas
• Making the money in your custody work for you.

Why is money different from other commodities?

Certain specific features associated with money are
• Money value decreases over period. Purchasing power of money today is more than the same amount tomorrow and the villain is inflation. This is called “Time value of money”.
• Money is dynamic. Money never rests with a person. The purpose of money is to satisfy needs. It chases things and services that satisfy human needs and in this process it moves from one hand to another.
• Money is a seed capable of growing into a tree and generating more money. There are various products wherein money can be invested. The invested money generates returns which ensure growth of money. Money does not grow in trees, but definitely it grows when invested in financial instruments and products. The general principle that that guides the growth of money is “Higher the Risk, Higher the Return”.
• Money leaves at a faster rate than it’s arrival. Money generation sources are scarce compared to money spending avenues. In everybody’s life, the tendency to spend is more. As a result the spending increases at a much faster rate than the rate of generation of income. But, spending never drops in same proportion when the income drops.
• Money is a double edged sword. Various emotions are associated with money. Money brings happiness and self-esteem. Too much money causes risk, worry and insecurity feeling. Even if it invested, the risks associated with investment cause worry. Thus all emotions are associated with money.
• Money is impartial. Just like nature, money too is impartial. It does not look at the personality, nationality, religion or gender of the person. It rewards those who work hard, innovate, take calculated risks, and follow disciplined investment rules.

Please go through the tutorial video (Courtesy: The Atlantic) to have a better understanding of the concepts.

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