Mama Thrifty® LLC

The Reasons We Invented Money

Way long ago, money did not exist. Cool, right? Actually, not really.

Let’s discover why money exists and why money exists for our benefit.

People needed to produce everything they needed at the beginning of humanity. These things were pretty much necessities; food, clothing, and shelter. Tools that would help with the gathering of food, water, hunting and travel were also added to the list of projects to get done.

Would you be able to do all the things to be entirely self-sufficient? What if you weren’t good at knapping a flint that could help to bring home some dinner? Keep your children safe from a predator?

You could find someone to make something for you. But, why would they do that without also getting something they needed? Would you be able to provide that thing they want?

Maybe you are really great with tanning skins, weaving baskets, or making musical instruments? Would you rather spend more time doing what you do well and know the person that is really great making at useful tools? How would you get those wonderful and useful tools without money?

You would need to bring them something to trade for their tools. Would they like a nicely tanned skin? Maybe a good quality basket? How many would it take to make a deal? Would you both be satisfied with the trade offerings? How do you set the value of these items?

Sometimes people would trade for items they needed. Barter is when people trade one thing for another thing. Barter still exists in some form today. Perhaps you have traded extra tomatoes for someone else’s extra zucchini.

Barter has drawbacks at all times, but especially as communities became larger. You may need to make multiple trades in order to get what you really need. Many trades makes barter cumbersome and wastes time!

Money smoothes out exchanges which saves time and yields greater satisfaction. Time is spent determining who to purchase an item from. Money can be saved over time for larger purchases.

The development of money helped to give us more time and freedom by making items we produced exchangeable for a commonly accepted form of payment.

It becomes quickly apparent that money was a good invention. Having money to trade for goods and services is a pretty streamlined and efficient way of carrying out life’s needs and wants.