Meaning, Uses and Saving of Money for Solar PV Business for JSS 1

Concept of Money

Performance Objectives

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

1. explain the meaning and origin of money;
2. discuss the uses of money;
3. state the importance and methods of saving money.
4. describe the sources of Solar Photovoltaics (PV) Installation and Maintenance start-up.

Meaning of Money

Money is anything that is generally accepted as a means of exchange for goods and services, and for settling debts.

It makes it easier for people to buy and sell things without having to exchange goods directly. Money also helps people to store value for future use and to compare the value of different items.

Evolution of Money

Before money as we know it existed, people used different ways to exchange goods and services. This process of change over time is called evolution.

The Barter System

The earliest form of exchange was the barter system. In this system, people directly exchanged goods and services for other goods and services without using money.

For example, a farmer with excess yam might exchange it directly for a fisherman’s fish. However, the barter system had problems. It was often difficult to find someone who had exactly what you wanted and also wanted exactly what you had. This problem is called the “double coincidence of wants.”

Commodity Money

Over time, people started using certain valuable goods as a form of money. These goods were called commodity money because they had value on their own and were also accepted for exchange.

Examples of commodity money used in different parts of the world and in Nigeria included cowries, salt, beads, metals like gold and silver, and even livestock such as cows or goats. These items were easier to carry and divide than bartered goods, but they could still be heavy or spoil.

Metallic Money (Coins)

As societies developed, people began to use metals like gold, silver, and copper to make coins. These coins had a standard weight and value, and they were stamped with symbols to show their authenticity.

Coins were durable, easy to carry, and could be divided into smaller units. This made trade much simpler and more efficient than commodity money.

Paper Money (Banknotes)

Later, paper money, also known as banknotes, was introduced. Initially, these were promises from banks or governments to pay a certain amount of gold or silver to the holder of the note.

Today, most paper money is “fiat money,” meaning its value comes from government decree and public trust, not from being backed by a physical commodity. Paper money is lightweight, easy to carry in large amounts, and convenient for transactions.

Uses of Money

Money plays several important roles in daily life and in the economy. Its main uses include:

1. Medium of Exchange: This is the most common use of money. It means money is accepted by everyone for buying goods and services. Instead of exchanging goods directly, people use money to make purchases. For example, a person pays Naira to buy food, clothes, or pay for transport.
2. Measure of Value: Money helps to determine the value of different goods and services. It provides a common unit to compare how much one item is worth compared to another. For instance, a bag of rice might cost ₦30,000, while a pair of shoes costs ₦15,000. This shows that the bag of rice is worth twice as much as the shoes.
3. Store of Value: Money allows people to save their wealth for future use. Instead of buying goods immediately, people can keep money and use it later to buy things they need. This is why people save money in banks or at home.
4. Standard of Deferred Payment: Money is used to settle debts or make payments that are due in the future. For example, when a person takes a loan, they promise to pay back the money over a period of time. Money serves as the standard for these future payments.

Saving Money

Saving money is an important habit that helps individuals and businesses plan for the future.

Meaning of Saving Money

Saving money means keeping aside a portion of your income or earnings instead of spending it immediately.

It involves setting aside funds for future needs, emergencies, or specific goals.

Importance of Saving Money

Saving money is very important for several reasons:

1. For Future Needs: Saving helps people prepare for future expenses like school fees, buying a house, or starting a business.
2. For Emergencies: Unexpected events like illness or accidents can require money. Savings provide a safety net during such times.
3. To Achieve Goals: Many goals, such as buying a new phone, a bicycle, or even a small solar lamp, require money. Saving helps to reach these goals.
4. For Investment: Saved money can be invested to earn more money, helping wealth to grow over time.
5. Financial Security: Having savings provides a sense of security and reduces worry about money problems.

Methods of Saving Money

There are different ways people can save money, depending on their situation and goals:

1. Piggy Banks or Home Savings: This is a simple method where people keep money in a secure container at home, like a piggy bank, a box, or a safe place. It is easy to access but may not be very secure for large amounts.
2. Bank Accounts: Opening a savings account in a commercial bank is a common and secure way to save. Banks keep money safe and often pay a small interest, meaning the saved money can grow.
3. Cooperative Societies (Ajo/Esusu): In many Nigerian communities, people form cooperative societies or informal savings groups like Ajo or Esusu. Members contribute a fixed amount regularly, and the total sum is given to each member in rotation or at an agreed time.
4. Investment Schemes: For larger savings and longer-term goals, people can invest in schemes like government bonds, mutual funds, or other financial products that help money grow. However, this is usually for older individuals with more money.
5. Recording Savings: Keeping a record of how much money is saved and when it was saved helps to track progress and stay motivated. This can be done using a simple notebook, a savings chart, or even a cardboard card designed for this purpose.

Sources of Funding for Solar Photovoltaics (PV) Installation and Maintenance Start-up

Starting any business, including a Solar PV Installation and Maintenance business, requires money. This money is called funding or capital. For a JSS1 student thinking about a small start-up, the initial sources of funding are usually close to home.

Personal Sources

Personal sources of funding come directly from the individual who wants to start the business. This means using money that the person has saved up themselves.

Examples of personal sources include:

1. Personal Savings: Money saved from allowances, gifts, or small jobs done over time. For a young person, this might be enough to buy a few basic tools or a small solar component to start learning and experimenting.
2. Selling Personal Items: Selling old items that are no longer needed, like toys, books, or clothes, to raise a small amount of money.
3. Income from Small Ventures: Earning money from small tasks like helping neighbours, running errands, or doing simple chores.

Using personal savings shows commitment and responsibility, which can be helpful if a person later seeks funds from others.

Family Sources

Family sources of funding involve getting money from parents, guardians, or other close relatives to help start a business.

Examples of family sources include:

1. Gifts from Family: Parents or relatives might give money as a gift to support the start of a small business, especially if they believe in the idea.
2. Loans from Family: Family members might offer a small loan, which would need to be paid back over time, possibly with an agreement on how and when to repay.
3. Family Investment: Sometimes, family members might see the potential in the business idea and decide to invest a small amount, becoming a very early supporter of the venture.

Family support can be a great way to get initial funding because family members often trust and want to help each other succeed. It is important to discuss the business idea clearly with family members and show them how the money will be used.