Meaning, Qualities and Benefits of Money for JSS 1

Meaning, Qualities and Benefits of Money for JSS 1

Performance Objectives

By the end of the lesson, students should be able to:

1. explain the concepts of money, income, savings and investment
2. mention the benefits of money.
3. explain the different motives for holding money.
4. State the qualities of money

Money is an important part of daily life. It helps people to buy the things they need and want. Understanding what money is, how it works, and why people use it is essential for everyone.

Concepts of Money, Income, Saving, and Investment

Meaning of Money

Money is anything generally accepted as a medium of exchange for goods and services, and for the repayment of debts.

In Nigeria, the Naira and Kobo are the official money. Money makes it easier to trade because people do not have to exchange goods directly, which is known as barter. Instead, people can sell what they have for money and then use that money to buy what they need from others.

Meaning of Income

Income is the money a person or household receives regularly in exchange for work, goods, services, or through investments.

People earn income in many ways. For example, a teacher earns a salary, a farmer earns money from selling crops, and a trader earns money from selling goods. Income is what allows people to buy things and meet their needs.

Meaning of Saving

Saving is the act of setting aside a portion of one’s income or money for future use instead of spending it immediately.

When people save, they keep money for a specific goal, like buying a new item, paying for education, or for emergencies. Saving can be done by keeping money in a piggy bank at home or in a bank account.

Meaning of Investment

Investment is the act of putting money into something with the expectation of making a profit or gaining more money in the future.

Unlike saving, which simply keeps money, investment aims to grow money. For example, a person might invest by buying goods to sell at a higher price, or by putting money into a business that is expected to grow and pay back more money later. Investment helps to increase wealth over time.

Benefits of Money

Money provides many benefits that help people live comfortably and meet their needs. Some of these benefits include:

1. Feeding: Money is used to buy food items like rice, beans, yam, fruits, and vegetables from markets and shops. This ensures that people have enough to eat and stay healthy.
2. Shelter: Money is needed to build, rent, or buy houses and apartments. Having a safe and comfortable place to live is a basic human need that money helps to provide.
3. Education: Money pays for school fees, textbooks, uniforms, and other learning materials. It allows children to go to school and gain knowledge and skills for their future.
4. Healthcare: Money is used to pay for medical treatment, hospital bills, medicines, and doctor’s visits. This ensures that people can get help when they are sick and maintain good health.
5. Assistance: Money can be used to help family members, friends, or people in need. It allows individuals to support others during difficult times or contribute to community projects.
6. Travelling: Money pays for transportation costs, such as bus fares, train tickets, or fuel for vehicles. It enables people to move from one place to another for work, visits, or holidays.
7. Clothing: Money is used to buy clothes, shoes, and accessories. This allows people to dress appropriately for different occasions and protect themselves from the weather.
8. Communication: Money pays for mobile phone airtime, internet data, and communication devices. This helps people stay connected with family and friends, and access information.
9. Entertainment: Money can be used for leisure activities like watching movies, playing games, or attending social events. This helps people relax and enjoy their free time.

Qualities of Money

For something to serve as good money, it needs to have certain qualities. These qualities make it easy for people to accept and use money. Important qualities of money include:

1. Acceptability: Money must be generally accepted by everyone in a community or country as a means of payment. If people do not trust or accept it, it cannot function as money.
2. Durability: Money should be strong and last for a long time without getting easily damaged or worn out. This means it can be used repeatedly without losing its value.
3. Portability: Money should be easy to carry around and move from one place to another. It should not be too heavy or bulky, making transactions convenient.
4. Divisibility: Money must be easily divided into smaller units without losing its value. This allows people to make payments for items of different prices, from very small to very large.
5. Relative Scarcity: Money should not be too common or too rare. If it is too common, it loses its value quickly. If it is too rare, it becomes difficult to find and use for transactions.
6. Homogeneity: All units of the same denomination of money should be identical in appearance and value. For example, all N100 notes should look the same and have the same value.
7. Recognisability: Money should be easy to identify and distinguish from other items. This helps prevent counterfeiting and ensures trust in the currency.

Motives for Holding Money

People hold onto money for different reasons, not just to spend it immediately. These reasons are called motives for holding money:

1. Transactionary Motive: This is the most common reason for holding money. People keep money to pay for their everyday needs and regular expenses. This includes buying food, paying for transport, purchasing clothes, and other daily transactions. They need money readily available to make these purchases.
2. Precautionary Motive: People hold money to prepare for unexpected events or emergencies. This money is kept aside for unforeseen circumstances like sudden illness, accidents, or unexpected repairs. It acts as a safety net to handle future uncertainties.
3. Speculative Motive: This motive involves holding money to take advantage of future opportunities to make more money. For example, a person might keep money aside, waiting for the price of a particular item to drop before buying it, or waiting for a good business opportunity to invest in. The goal is to profit from future changes in prices or market conditions.