FINANCIAL LITERACY : FINANCIAL LITERACY MODULE ONE An Educational Initiative of Education Plus
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Concept of Money : Concept of Money
What is Money : What is Money
Money Exchange is Superior : Money Exchange is Superior Money has a standard value: Money or currency has value that is common for all. Thus for example, a hundred rupee currency note has same value for everyone in India.
Money can be easily stored: Money can be easily stored in a safe deposit vault or a bank. However the same is not true for items in a barter exchange. Thus for example, if a shopkeeper sells ice creams in exchange for bags of rice, he will soon have a problem storing the accumulated rice.
Everyone accepts money exchange: Imagine you want to buy a mobile phone in exchange for five cricket bats. However, the seller (the shopkeeper) does not want your offer as he wants money in exchange for the mobile phone. Thus, practical trade becomes extremely difficult in barter exchange. Common acceptance makes money exchange much easier than barter exchange.
Money – How does it look : Money – How does it look DOLLAR – United States of America YEN– Japan RUPEE – India EURO – Europe
Concept of VALUE : Concept of VALUE
What is Value : What is Value Value is what a product or service is worth.
It is often measured in terms of money.
Value depends on what people are willing to pay for a product or service.
How Value Differs : How Value Differs Glass of Water and Cookies Hungry and Thirsty man in a desert Man relaxing after having lunch What would be the value a glass of water and a pair of cookies for these two categories of people More Less
How Buying and Selling Happens : How Buying and Selling Happens We are ready to buy something if its value is more than or equal to its market price.
If you like an T-Shirt in a shop, and you think it is worth $10, but its market price is $8, you may Buy it.
However if the same T-Shirt has a market price of $15, you may Not Buy it. Example:
Concept of Income : Concept of Income
What is Income : What is Income We get money for doing work. This is called Income or more specifically, Earned Income.
Income that we get without doing work (like pocket money or gift from elders) is called Not-Earned Income.
Earned Income : Earned Income A Postman gets income for delivering mail. (gets money in exchange for doing work) A Doctor gets income to cure patients. (gets money in exchange for doing work) A Teacher gets income to deliver lessons to children. (gets money in exchange for doing work)
Not-Earned Income : Not-Earned Income Get money as birthday gift (get money without doing work) Get monthly pocket money from parents at start of the month. (get money without doing work) Get money as Diwali Gift from grandparents (get money without doing work)
Concept of NEEDS AND WANTS : Concept of NEEDS AND WANTS
What are Needs and Wants : What are Needs and Wants Need:
A need is something we cannot live without.
Want:
A want is something you would like to have but you can live without it.
Need : Need Needs are things required for survival.
Want : Want Wants are things required for comfort, luxury , entertainment, etc.
These are things which are not necessary for survival.
CONCEPT OF SCARCITY OF RESOURCES : CONCEPT OF SCARCITY OF RESOURCES
Resources are Scarce : Resources are Scarce Resources are anything which has value.
In this world, resources are scarce (less in quantity) and limited (supply is not infinite).
There is always a limit to the amount of resource you can have.
You never have enough money, which can buy everything you want.
Hence you need to take decisions what to buy and what not to buy.
Need to make choices : Need to make choices Karina has $5 Ice-Cream
Cost = $4 Wafers
Cost = $3 Karina has to make a choice: Buy either Ice-cream or Wafer We have many needs and wants; but have only limited money (resource) to buy things Karina cannot buy both. She has only $5. Cost of both things is $7
Thank You : Thank You An Educational Initiative of Education Plus
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