Disciplining spending habits - Part 1

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Money is defined as any commodity that's generally or universally accepted in payment for goods and services or settlement of debts. Another scholar explains money to be the means of valuation and of payment as both the unit of accounts and thus the widely acceptable medium of exchange .

Also Sir John defines money as what money does . Money could even be defined as anything that's generally acceptable as a medium of exchange and at an equivalent time act as a measure and store useful .

Explaining further values of money would simply mean the quantity of goods and services that money can be able to purchase at a particular time.

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The Value of money refers to what money can buy which depends on the purchasing power of money that is at hand . As long as the value of price increases, the value of money reduces and vice versa. The value of money is said not to be constant. It changes from time to time.

For example, if a commodity cost $100 in 2020 and in 2021, it's jumped to $200, it means the worth of cash has fallen. And if the worth turns to $50 it means the worth of cash has increased.

The factors that are further explained to be influencing the value of money :

The general persistent price level of goods and services: there is an inverse relationship between the price level and value of money, when price increases, the value of money falls because it can only buy few goods. And on the opposite hand, when prices reduced, the worth of cash increases, it means money can purchase more goods.

Supply of money:- the quantity of money in circulation also influences the value of money. If there's an excessive amount of money in circulation chasing fewer goods, the values of costs increases and ultimately money value reduces. And explaining in another way , if the money in circulation is few, then the price level is reduced and ultimately the value of money increases.

Volume of goods and services:- if there is increase in the volume of goods and services and the supply of money is constant, the value of money will increase, more goods and services can then be purchased.

The motives for holding money :
Transactional motive :- this motive arises when people wish to hold money to meet daily transactions. People desires money to satisfy their day to day transactions for instance fuel, automobile expenses and foodstuffs. This motive is influenced by the level of income.

The Transactional motive explains further the role of cash as a medium of exchange
Precautionary motive :- this is the desire on the part of the people or business to hold money so that they can take care of unforeseen circumstances that are also called unexpected events.

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Greetings @ mandato
There is no doubt that money is fundamental to be able to have the things we need in our life, it is the unit of measure for the purchase or sale of any good.
To be able to pay for something in 2020 with a value of $ 100 and the same good in 2021 with a value of $ 180, means that money has lost its purchasing value due to inflation, where there is more demand than supply.

Thank you very much for sharing your publication.

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