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Cows and stone wheels have something in common with dollar bills: All of them have been used as forms of money. In other words, they've all been widely accepted in exchange for goods and services.

That means they've also had three functions, or uses, in common, as Economic Education Coordinator Scott Wolla said in " Functions of Money," an episode of the Economic Lowdown Podcast Series.

Wolla described the functions that money has consistently had over time:

Money is a store of value. Wolla gave the example of earning $25 today and holding on to the money to spend it in the future. Although he noted that money isn't a perfect store of value, "holding money is usually a more effective way of storing value than holding other items of value such as corn, which might rot," he said.

Money is a unit of account, meaning we use it "to measure value in economic transactions," Wolla said. What kind of deal did your friend get on her blue jeans? You'll have a good idea if she tells you how many dollars she paid. It would not be as helpful to know how many bushels of corn she would have had to turn over to get the jeans.

Money is a medium of exchange, or "widely accepted as a method of payment."

How Did Money Develop?

©Rudzhan Nagiev/iStock/Getty Images Plus

Money has evolved, Wolla explained. He outlined three stages and types of money.

Commodity money: Gold and silver coins are examples of commodity money, which "could be used in exchange for other goods and services" but also had its own value and other uses, Wolla said.

Representative money: A paper certificate that could be redeemed for gold in a bank vault is one example of representative money, "a certificate or token that can be exchanged for the underlying commodity," Wolla said.

"Over time people grew to trust the paper certificates as much as the gold," he said. "Representative money led to the use of fiat money-the type used in modern economies today."

Fiat money: The value of fiat money "comes from being declared 'legal tender,' an acceptable form of payment, by the government of the issuing country," Wolla said. U.S. currency is fiat money and doesn't have its own practical value, like commodity money, nor does it represent a commodity elsewhere.

What Are Some Historic Forms of Money?

Money has taken on many forms, Wolla said.

"Cattle have been used as money at different points in history," he said.

What category of money do cows fall under? Cattle, which were among the earlier forms of money, could be considered a commodity money, according to a Central Bank of Brazil article.

The residents of Yap Island in what is now Micronesia famously used stone wheels as large as 13 feet in diameter as a medium of exchange, according to a 2018 article on cryptocurrencies (PDF) by Aleksander Berentsen and Fabian Schär in the St. Louis Fed research publication Review.

What Are Characteristics of Money?

Some forms of money do a better job with money's three functions-and are more convenient to use.

There are six characteristics of money that make it useful, Wolla said in the Econ Lowdown podcast episode: durability, portability, divisibility, uniformity, limited supply and acceptability.

Judging by how William Henry Furness described the Yap stone money in 1910, the wheels would work well based on three of those characteristics but not based on the others. (Some excerpts from his book were reprinted in a 1915 article in The Economic Journal.)

The money was accepted as payment by the island's residents, who transferred ownership rights to it virtually and all of whom tracked the ownership. Thus, the system was based on a distributed ledger and was like that of cryptocurrency Bitcoin today, according to the Review article. (For a breakdown on how useful Bitcoin is as money, check out a March 2018 Page One Economics article.)

The stones also were long-lasting. And the stone disks were hard to come by-they were quarried, shaped and shipped from another island hundreds of miles away, Furness reported.

So the stone money ticked the boxes for wide acceptance, durability and limited supply. But it also was heavy, hard to move or shape, and came in a variety of sizes and weights, so it couldn't be called portable, easy to divide or uniform.

There are some similar problems with using cows as money. Wolla compared using cows as money with using a stack of $20 bills equal to the value of a cow.

Cows aren't very portable-they're "difficult to transport to the store," he said. And a $20 bill can be exchanged for other denominations, like a $10, a $5, four $1 bills and four quarters, but cows aren't very divisible.

Like the stone money, but unlike $20 bills, cows also are not a very uniform form of money. "Cows come in many sizes and shapes and each has a different value," Wolla said.

"It seems 'udderly' clear at this point [that]-based on the characteristics of money-U.S. $20 bills are a much better form of money than cattle," Wolla said.

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Here's What Makes Money, Money | St. Louis Fed

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Everything that's been used as a form of money has three functions in common and needs certain characteristics to work well.

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What Makes Something Useful as Money? Explore Economics Video Series

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This video shows items that have been used as money in the past and explains why something used as money should be relatively scarce, generally acceptable, portable, durable, and divisible.

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65% of American Have No Idea How Much Money They Spent Last Month

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65% of American Have No Idea How Much Money They Spent Last Month

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Survey: 65% of Americans Have No Idea How Much They Spent Last Month

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Most people don't keep very good track of all their finances. While you may not know your credit score off the top of your head or have your bank account number memorized, the assumption is that yo...

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Let's explore a little economics.

Today we are going to learn about income, saving, spending, and savings goals. You may want to have a piece of plain paper, some markers or crayons, and some tape for this lesson.

What would you do with $2 you earned helping your neighbors clean up their yard? You could spend it, or you could save it-right?

The payment people earn for work they do, is called income. Is there work you do around your house?

Maybe you set the table, help with the dishes, dust the furniture, walk the dog, or help with yard work. You may do that because it is work you do as part of your family. Or, maybe you are paid-you earn income for some of the work you do.

Sometimes you might receive money as income-payment for work. But sometimes, you probably receive money as a gift. Have you ever received money as a gift? Maybe for a birthday or another special day in your life?

What do you do with the income you earn or the money you receive as a gift? There are really two things that you can do with your income. You can save it, or you can spend it. Spending means using some income to buy things now. You probably know something about spending if you buy things! Saving means keeping some income to buy things in the future.

It is a really good idea to save for the future. A savings goal is something that you are saving to have in the future.

People have lots of savings goals-they save for emergencies like fixing a broken car, or for big items, like a new refrigerator.

People also save for their kids to go to college, for vacations, for when they retire, and for special things that they want.

It isn't easy to save-there are lots of things that we want to spend money on right now. It helps to remind yourself of your savings goal.

One thing you can do is draw a picture of your savings goal and place it where you can see it-to remind you why you are keeping your money for the future-and not spending it today.

Here's a picture of my savings goal. I have it hanging near my computer to remind me that I am saving-and to encourage me NOT to spend now. Here are some examples of other kids' savings goals. Do you have a savings goal?

Let's use your paper and your markers to draw a picture of your savings goal.

Hang it somewhere-maybe near your piggy bank-to encourage you to save, NOT spend, so that you meet your goal.

Here's a little song to help you remember about saving. We'll show you the words so you can sing along. Just follow the bouncing ball.

If you spend all of your income,
Spend it every day
If you're tempted by the small stuff
Or don't keep your money safe.
You'll end up with stuff around you,
Lots and lots of stuff today.
If you spend all of your money,
You won't reach your goal.

Chorus: Save some money now! Save some money now!
Save some money now, now, now, now, now!
Save some money now! Save some money now!
Save some money now, now, now!

If you save some of your money,
Save some every day.
If you save some of your money,
You can reach your goal that way.
Don't be tempted by the small stuff,
And keep your money safe.
If you save some of your money,
You can reach your goal.

Chorus: Save some money now! Save some money now!
Save some money now, now, now, now, now! Save some money now!
Save some money now! Save some money now, now, now!

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Saving and Savings Goals - Explore Economics Video Series

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In this short video, kids learn about income, spending, saving, and savings goals, and they are encouraged to save for the future.

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This activity is adapted from a lesson by Andrew T. Hill, Ph.D., Federal Reserve Bank of Philadelphia, written to accompany the book Uncle Jed's Barbershop by Margaree King Mitchell (ISBN: 0-689-81913-7).

Prior knowledge is needed before playing the game. Review these concepts as needed.
Income: Payment people earn for work they do.
Saving: Keeping some income to buy things in the future.
Savings goal: A good or service that you want to buy in the future.
Spending: Using some or all of your income to buy things you want now.
View the Uncle Jed's Barbershop Lesson for Grades 3-5.
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If you have difficulty accessing this content due to a disability, please contact us at 314-444-4662 or economiceducation@stls.frb.org.

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In this activity, elementary students will learn how to reach a savings goal.

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Curious George Saves His Pennies Lesson for Grades 1-2

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Students create a savings goal, come up with ways they can earn money to reach their savings goals, and determine how many weeks it will take them to reach their goals.

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"M IS FOR MONEY" | By Rob Phelan | Kids Story Read Aloud

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Play free educational kids games to learn about coins. Choose from designing, stamping, or flipping coins; panning for gold; solving trivia; and more.

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Alexander, Who Used to Be Rich Last Sunday

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Alexander, Who Used to Be Rich Last Sunday

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Alexander, Who Used to Be Rich Last Sunday

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Learning to add money, make change, and compare money amounts are skills that are coming up in our money unit. I've been working on putting together lots of fun games and engaging opportunities to practice. Here are some money activities for second grade that I'll be using. These activities will have your students learning about money without even realizing it!

Materials:

How to Play:

1. Students place a paper clip onto the center of the spinner and hold it in place with the tip of a pencil.

2. They spin the paper clip and place the coin they land on onto the piggy bank. They keep spinning and adding coins to the piggy bank.

3. Watch out for the hammer! If students land on the hammer three times, it breaks the bank! The game is over and students count up to see how much money they collected.

Students may like to play the game more than once to try to see if they can get more money into the bank before it breaks again. They can also play with a partner or group. The person in the group who gets the most money into their bank wins the game.
You might explain to students that long ago some people stored their money in ceramic piggy banks. These banks did not have a removable plug like the ones today. The only way to get the money out of the bank was to literally break the piggy bank. Today, the phrase "Break the Bank" means to spend all of your money or that something is too expensive. It's a great way to throw in a little mini-lesson on idioms!

Play "What's in My Wallet?" This is a fun game that your students will love. Tell students the number of coins and/or bills that's in your imaginary wallet and have them try to guess the amount. For example, you might say "I have one bill that is under ten dollars and two coins. What's in my wallet?" Then students try to guess the bills/coins and amount. You might provide younger students with more clues: "I have one dollar bill and two coins that are less than ten cents."

Money Scavenger Hunt: Hide a certain amount of coins and/or bills around the room. Tell students how many coins and/or bills are hidden and let them go find them. After finding all of the coins and/or bills, they add up the amount.

Shopping Trip: Give students store sale ads. Tell them they have a certain amount of pretend money and let them go shopping! Have them draw and write about what they were able to purchase, how much money they spent, and how much change they had left.

Money Videos: Watch videos and learn songs about money using YouTube. I've put together a collection of videos I think are perfect for this here.

Here are a few of the other money games and activities that I'll be incorporating into our unit:

This quick, print-and-go game has students roll a die and add the money amounts together until they get to $1.00. I also created a Five Dollar Dash, too, where students race to add up to $5.00.

Another no-prep game that has students roll a die, graph the coins they land on, and then total up all the coins to see how much money is in the piggy bank.

Students roll and move around the game board, adding money amounts as they go. The student that collects the most money by the end of the game wins.

This will be my first time using task cards and I couldn't be more excited! Students use a picture of a girl at a Farmer's Market with different fruits and vegetables for sale to complete the 24 different task cards. Four of the task cards have open-ended questions that require students to give a longer written response.

Write-the-Room is always a favorite of my kiddos. 20 numbered piggy banks are placed around the room. Students search for the banks, count the coins on each one, and record their answers on the recording sheet.

Spin and Spend is another easy, no prep game. Student spin the spinner and subtract the amount they land on from the amount on a piggy bank. I also made a version that uses dollar amounts.

My kids have actually played this one already and they LOVED it. As soon as they finished, they asked, "Can we play this again?" "Of course!" I said. So they sat back down and played another round. I loved hearing them chant "1, 2, 3, 4, let's have a coin war!"

Played like the card game War, students each turn over a card from their pile. They count the coins on their card. The student with the highest amount keeps both cards. They keep playing until all their cards have been turned over. The student with the most cards at the end wins.

I hope these games and activities are helpful to you when you're teaching money. You can download the first game "Don't Break the Bank" for FREE by clicking the link below.

A black and white version is also included in the download if you're concerned about using colored ink. Students might enjoy coloring it.

All of the other games can be found in my Money: Centers, Games, and Task Cards product in my TPT store. It comes with all of the directions and templates you'll need to create these activities, plus ideas for how to differentiate each game for special needs learners and above level students.

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Money Activities for Second Grade - Primary Theme Park

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This post contains affiliate links to products I recommend. Read my full disclosure statement. Learning to add money, make change, and compare money amounts are skills that are coming up in our money unit. I've been working on putting together lots of fun games and engaging opportunities to practice.

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Financial Fables are entertaining stories that combine reading, economics and personal finance into life lessons that feature "money morals." Through quick, interactive online tales, students can learn useful financial management skills that will better prepare them for the future.

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Financial Fables are entertaining stories that combine reading, economics and personal finance into life lessons that feature "money morals." Through quick, interactive online tales, students can learn useful financial management skills that will better prepare them for the future.

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Order FREE Consumer Financial Protection Bureau Publications.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive.

You may download publications by clicking on each title. Adobe Acrobat Reader is required to view the publications and is available for download at: http://get.adobe.com/reader

In most cases, you may order up to 200 free copies of each publication. All publications are free from the CFPB. If you need larger quantities, contact [email protected]

For single copies or small quantities, place your order for pueblo.gpo.gov.

Please allow 3-4 weeks for delivery.

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Order FREE and low cost federal consumer publications from CFPB

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There may not be any math topic that is more relevant to our everyday life than that of money. It's essential that we teach our kids to add and subtract money, to use it wisely and understand how to handle their money! The book Pigs Will Be Pigs by Amy Axelrod is an excellent introduction to money for kids and helps them understand not only how to add money, but also to realize that it is finite. These Pigs will Be Pigs money lessons are intended to help kids think about whether or not they have enough to buy what they want to buy, as well as practice adding and subtracting.
*Please Note: Some of the links on this site are affiliate links and help support the work of this site. Read our full disclosure here.*
I love the Pigs Will Be Pigs books because they make math relevant and always show ways that we need and use math in our everyday life. If you haven't already, be sure to grab my free lessons to use with the book, Pigs in the Pantry, which explore math in the kitchen!

Pigs Will Be Pigs: Fun with Math and Money by Amy Axelrod

In the book Pigs Will Be Pigs , the Pig family wants to go out to eat, but doesn't have enough money. This sends them on the hunt for loose change around the house.

After reading through the story, let your kids go back through and keep track of how much money each family member finds to figure out the total. I've included two different organizers to help with this, depending on what you or your kids prefer.

The first page is simply a place to record things as they find them, and gives a little more freedom to figure out what to do with what they discover in the book. But if you like a little more structure, I've also included a table that organizes the information a little more for them.

Either way, the point is for them to record the different amounts of money that the pigs find, and then determine the total. Try to let them come up with the total on their own, as there are different ways to go about it.

Once they figure out how much money the Pig family has to spend, there is a page of discussion questions to go along with the story, which require using the restaurant menu in the book.

After answering those questions, I've created another extension lesson which allows for more practice.

This gives kids yet another chance to add up money, and then think about how much they can buy with that money. It's important for kids to understand that if they don't have enough money to buy something, they have to say no or buy something cheaper! 🙂

Each of these lessons flow from the book and require going in order as you determine how much money they have, how much they spend, and what's left.

They do not, however, have to be done all in one sitting! Maybe one day you just read the story. Then the next day let kids go through and tally up how much money they actually found, and answer the discussion questions. Then on the day after that, they could work on the "Dessert" lesson.

However you choose to use this, I hope it makes math fun and relevant to your students!
Looking for more fun ideas for math and money? Try one of these other FREE downloads:

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Help your kids learn all about money with these FREE Pigs Will Be Pigs money lessons! This is great book introduces kids to adding money and making change!

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Order Materials : Product List | U.S. Currency Education Program

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A fully illustrated book that introduces 1st – 3rd grade students to the unique features of Federal Reserve notes. The characters in the book journey through a nearby carnival, where they discover the similarities between the attractions and security features of U.S. currency.

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READ ALOUD Children's Book - A Penny's Worth

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I Am Money by Author Julia Cook and Garrett Gunderson