What money actually does
Money is not valuable in itself. A £20 note is a piece of polymer. What makes it powerful is that everyone agrees to accept it, which lets you swap your time and skills for anything else being sold.
Lesson overview
What you'll learn in this lesson
Understand the functions and uses of money, the importance and practice of budgeting, and managing risk
Key learning points
- • From barter to money
- • Cash, cards and digital money
- • Inflation eats savings
- • Managing risk with money
This lesson at a glance
- 30 minutes
- 19 parts to scroll through
- 4 quick checks
- Marked quiz at the end
- Gentle pace: short sittings with pauses
Words to know
Scroll down — the lesson carries on below
Watch & discover
Part 1 of 19
Watch first
What money actually does
An English teaching video on this topic from Two Cents. Watch it, then scroll down for the lesson.
In a nutshell
Understand the functions and uses of money, the importance and practice of budgeting, and managing risk
What you already know
Part 2 of 19
Before we start
What you already know
You have bought things with cash or a card, and you know that some things cost more than others.
Key words
Part 3 of 19
Key words
Words you'll need today
- Medium of exchange
- Something everyone accepts in payment, so you do not have to barter goods directly.
- Store of value
- Something that keeps its worth over time, so you can hold it now and spend it later.
- Unit of account
- A shared measure of value, which is why prices can be compared at all.
- Inflation
- A general rise in prices, which means the same money buys less than it used to.
- Legal tender
- Money that must be accepted to settle a debt in a particular country.
Learning cycle
Part 4 of 19
Learning cycle 1 of 2
The three jobs money does
A short piece of teaching, then a check to make sure it has landed.
Explore the idea
Part 5 of 19
Learn
From barter to money
Without money you would have to barter: swap something you have for something you want, and hope the other person wants exactly what you are offering. That is slow and often impossible. Money solves it by being a medium of exchange — you sell your work for money, then use the money anywhere. It is also a unit of account, meaning it gives every different thing a comparable price, and a store of value, meaning you can hold it until you need it.
Explore the idea
Part 6 of 19
Learn
Cash, cards and digital money
Most money in the UK is not notes and coins. It is a number in a bank's records. When you pay by card the bank moves that number from your account to the shop's. Cash is anonymous and works without power or signal; digital money is traceable, easy to send at a distance and easy to overspend, because you never watch a pile of notes get smaller.
Quick check
Part 7 of 19
Quick check
Which of these describes money as a medium of exchange?
Quick check
Part 8 of 19
Quick check
Most money in the UK exists as
Reset break
Part 9 of 19
Pause
That's sitting 1 of 2 done
Stretch, get a drink, look out of the window. There is no timer and nothing is counting down — your place is saved, so you can come back in five minutes or tomorrow.
Learning cycle
Part 10 of 19
Learning cycle 2 of 2
Why money loses value
A short piece of teaching, then a check to make sure it has landed.
Explore the idea
Part 11 of 19
Learn
Inflation eats savings
If prices rise by 3% in a year, £100 kept under a mattress still says £100 but buys about £97 of last year's shopping. Money is only a good store of value if it earns interest that roughly keeps up with inflation. That single fact is why savings accounts and pensions exist rather than jars of cash.
Explore the idea
Part 12 of 19
Learn
Managing risk with money
Managing risk means keeping some money aside for things that have not happened yet: a broken phone, a vet bill, a boiler. Advisers usually suggest an emergency fund covering roughly three months of essential spending. Risk you can afford, you keep. Risk that would ruin you — a house fire, a car crash — you pay an insurer to carry.
Quick check
Part 13 of 19
Quick check
Prices rise 4% while your £200 sits in a jar. What has happened?
Quick check
Part 14 of 19
Quick check
Which risk is best handled by insurance rather than savings?
Common mix-ups
Part 15 of 19
Common mix-ups
Things people often get wrong
- Thinking money has value because it is made of something precious. Modern money has value because it is accepted and trusted.
- Believing cash under the bed is the safest choice. It is safe from loss but not from inflation, which quietly shrinks it every year.
- Confusing income with wealth. A big salary spent entirely leaves you with nothing; a modest salary partly saved builds up.
- Assuming an emergency fund is only for adults with big bills. Anyone with a phone, a bike or a pet has an emergency waiting.
Challenge round
Part 16 of 19
Game · Sort it
Which of these are true?
Drag each card into the right column. Tap a card first if dragging is fiddly.
True
Not true
Challenge round
Part 17 of 19
Game · Fill the gaps
Finish the sentences
Choose the word that belongs in each gap.
____ risk means keeping some money aside for things that have not happened yet: a broken phone, a vet bill, a boiler.
Mastery quiz
Part 18 of 19
Marked quiz
End of lesson quiz: What money actually does
6 questions, marked with the reasoning shown. No timer.
1. A 'store of value' means money
2. One disadvantage of paying by card compared with cash is that
3. An emergency fund of three months' essential spending is designed to
4. Barter is inefficient mainly because
5. Which statement about inflation is correct?
6. Legal tender means money that
Lesson round-up
Part 19 of 19
Lesson round-up
Ready when you are
Quiz score
Not sat
Games
Not played
Points this lesson
0
Best run
0 in a row
Luna: 0 out of 4 on the practice checks. Only if you feel up to it — one more?
Ask LunaDo the work
Your written work for this lesson
This is the part you'd do in your book at school. Pick the pieces below, write here or on paper, and photograph anything you draw or work out.
Should the town centre have a curfew for under-16s?
After a rise in reported vandalism, Harbrook council proposed that under-16s should not be in the town centre after 9 pm without an adult. Police recorded 62 incidents last year, most between 9 pm and midnight. Shopkeepers signed a petition supporting the plan.
A youth council objected. They pointed out that most young people in town at night were going home from sports clubs or work, that the plan punishes a whole group for the acts of a few, and that the library and the bus interchange are in the town centre. They asked instead for a late bus and a youth space.
The council voted to trial the curfew for six months and to publish the crime figures at the end.
Written for Good Learning Co.
Reading questions
- Give the strongest point on each side of the argument, using a fact from the case.
- Whose rights and whose responsibilities are involved here? Explain both.
- Write your own view on the curfew with reasons and one example.
Reading and response
ReadingRead the case in the lesson again and write what you think should happen, and why it is fair. Use one fact from the case as evidence.
2 paragraphs (PEE)
Extended writing
WritingWrite your answer to the lesson's big question in full: the strongest point on each side, then your own view with reasons and an example.
250–350 words
Reading log
ReadingFind one news story this week that links to this lesson. Note the headline, where you read it, and how it connects.
1 story, 4–5 sentences
Two sides of the argument
WritingWrite the strongest point for, the strongest point against, and then your own view with a reason.
3 paragraphs
Poster or leaflet plan
DiagramPlan a leaflet that explains this right or responsibility to someone your age, then photograph it.
1 planned page
Saved as you type.
Part 1 of 19 · Watch & discover