There's more to money than meets the eye. It's a concept that's often misunderstood.
And in this thread, I'll be sharing the concepts to begin seeing money in a new light.
#Finances #inflation #invest #Growth
And in this thread, I'll be sharing the concepts to begin seeing money in a new light.
#Finances #inflation #invest #Growth
Before we get started make sure you understand what we're doing. Here's the previous thread:
https://twitter.com/Recap_Budget/status/1553696999660290049?s=20&t=LacPfg0uYXAEbWsT-QzI8w
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How Does Money Work?
Let's start with the very basics.
Money is a tool that we use to exchange goods and services.
It's a way to keep score, if you will.
How Does Money Work?
Let's start with the very basics.
Money is a tool that we use to exchange goods and services.
It's a way to keep score, if you will.
2/14
Near the start of civilization, people bartered. If I had a cow and you had a chicken, we could trade and both benefit.
However, bartering had its limits.
Near the start of civilization, people bartered. If I had a cow and you had a chicken, we could trade and both benefit.
However, bartering had its limits.
3/14
What if I had a cow and but I didn't want your chicken?
I wouldn't trade my cow for your chicken, because it's not valuable to me.
This is where money comes in.
What if I had a cow and but I didn't want your chicken?
I wouldn't trade my cow for your chicken, because it's not valuable to me.
This is where money comes in.
4/14
Money is a way to even the playing field.
I may not need your chicken, but I can exchange my cow for money, and then use that money to buy what I do need, while spending only what I need.
So the question becomes, what is money?
Money is a way to even the playing field.
I may not need your chicken, but I can exchange my cow for money, and then use that money to buy what I do need, while spending only what I need.
So the question becomes, what is money?
5/14
Money is anything accepted by both parties in a transaction as a means of exchange.
Back then, this was livestock, shells, or pieces of gold. Today, money is usually paper bills, currency, or digital numbers in a bank account.
Money is anything accepted by both parties in a transaction as a means of exchange.
Back then, this was livestock, shells, or pieces of gold. Today, money is usually paper bills, currency, or digital numbers in a bank account.
6/14
But it doesn't have to be.
It could be a hat, a bushel of apples, or a promise to do someone's laundry.
Anything that is accepted as a means of exchange can be used as money.
But it doesn't have to be.
It could be a hat, a bushel of apples, or a promise to do someone's laundry.
Anything that is accepted as a means of exchange can be used as money.
7/14
Now that we know what money is, let's talk about how it works.
When you go to a store and buy something, you exchange money for a good/service. The store provides the good/service, and you trade it for money.
Now that we know what money is, let's talk about how it works.
When you go to a store and buy something, you exchange money for a good/service. The store provides the good/service, and you trade it for money.
8/14
This works since both parties agree on the value of what is being exchanged.
The store knows the good/service is worth $5, and you know that $5 is a fair price for what you are getting.
This works since both parties agree on the value of what is being exchanged.
The store knows the good/service is worth $5, and you know that $5 is a fair price for what you are getting.
9/14
Now that you know the basics of how money works, you can start to see how the economy works.
The economy is simply the sum of all the transactions that take place between people, businesses, and governments.
Now that you know the basics of how money works, you can start to see how the economy works.
The economy is simply the sum of all the transactions that take place between people, businesses, and governments.
10/14
When you buy a good or service, you are participating in the economy. The economy is always changing, and the value of money changes with it.
When you buy a good or service, you are participating in the economy. The economy is always changing, and the value of money changes with it.
11/14
Inflation is when the economy grows and the value of money goes down.
Deflation is when the economy shrinks and the value of money goes up.
Inflation is when the economy grows and the value of money goes down.
Deflation is when the economy shrinks and the value of money goes up.
13/14
The value of money is also affected by the supply and demand for money. If there is more money chasing after fewer goods, then the value of money goes up.
If there are more goods chasing after fewer dollars, then the value of money goes down.
The value of money is also affected by the supply and demand for money. If there is more money chasing after fewer goods, then the value of money goes up.
If there are more goods chasing after fewer dollars, then the value of money goes down.
14/14
Now that you have a basic understanding of how money works, you can start to think about how you can use it to your advantage.
Money is a tool, and like any tool, it can be used for good or for bad, but it's up to you to decide how to use it.
Now that you have a basic understanding of how money works, you can start to think about how you can use it to your advantage.
Money is a tool, and like any tool, it can be used for good or for bad, but it's up to you to decide how to use it.
If you enjoyed this then make sure to check out the next thread coming out tomorrow talking about different types of incomes and how to optimize them
This thread is laying the foundation for the threads to come, along with testing the concept, so it's a little bare resources wise.
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