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Topic 1: Know what money is
After completing this topic, you will be able to:
define money;
recognise the features of money;
explain the history of coins;
understand how money is recognised;
define the word ‘denomination’, and list denominations of UK notes and coins;
work out the denominations of UK banknotes and coins that make up a given
amount, and work out change;
appreciate the difference between cash and electronic balances; and
list some of the slang words used for money and explain their origins.
What is ‘money’?
Money is anything that is generally accepted as payment for goods and services. Money is
also a way of ‘keeping’ your wealth.
Features of money
To be generally accepted, money needs to be:
easily recognised by everyone;
accepted by people and shops;
easy to carry around;
available in different amounts (so that you can buy things of different values and
get change);
hardwearing, so that it lasts for a long time; and
always worth the same amount.
Using this list, do you think that gold passes the test of
being money?
If someone were to offer you a gold bar in exchange for
your mobile phone, would you take it? Consider that:
•
the price of gold (as at April 2010) is £23.86 per
gram;
•
one gold bar (measuring 5” x 3.5” x 0.25”)
weighs 1 kg;
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•
a mobile phone weighs about 50 g; and
•
your phone may be a very new or a very old model.
As you can see, this is a difficult question to answer.
In the past, gold was used to make coins
that were simple flat discs, but the gold was mixed with
other metals to make the coin stronger. So, people had
two problems:
• they had to weigh each coin to see how much it was
worth – and can you imagine how inconvenient it would
have been to carry scales around wherever they went?
• they had no way of knowing how much of the other
metals had been mixed with the gold, so they could
never tell how pure it was.
This is why people started making marks on coins to show
how much they weighed.
If you think about the cash that we use in the UK, it meets all of the criteria that allow it
to be accepted as money.
It is easily recognised by everyone – that is, we all know what our British notes
and coins look like.
It is accepted by people and shops – that is, shops, restaurants, dry cleaners,
hairdressers, petrol stations, etc, all accept our notes and coins.
It is easy to carry around – that is, it is small enough
to fit in wallets, purses and pockets.
It is available in different amounts – that is, we have
notes and coins of lots of different values (from a coin
valued at 1p through to a banknote valued at £50).
It is hardwearing – with banknotes lasting for about
two years, while coins can last for about 40 years.
It is always worth the same amount – that is, a £1
coin is always worth £1.
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Principles of Money
Denominations
Banknotes and coins are made with different values written on them so that we can buy
items for different amounts of money and receive change. These different values are
known as ‘denominations’.
The denominations of UK coin are: 1p; 2p; 5p; 10p; 20p; 50p; £1; and £2.
The denominations of UK banknotes are: £5; £10; £20; and £50.
Coins
Coins are made to very precise measurements, using a
combination of metals: copper-plated steel, cupro-nickel or
nickel-brass. One side shows the monarch’s head (at present,
Queen Elizabeth II), while the other side carries a design. This
design is different for each coin and it sometimes changes.
The edges of our coins are either smooth or milled (given
ridges). The £1 and £2 coins have inscriptions along the edge –
for example, ‘STANDING ON THE SHOULDERS OF
GIANTS’ (on a £2 coin).
Activity 1a
New designs for the circulating coins in the UK were unveiled in 2008. Visit
www.royalmint.com and have a look at the new designs.
a) Who created the new designs?
b) What image appears when all of the new coins are arranged in a certain
way?
c) Which coin is completely unaffected by the changes?
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d) Below you will find the outline of the coins that we have in everyday use in
the UK. The smallest denomination is on the left; the largest is on the right.
Write inside each shape the image that used to be on that coin before the
new designs were introduced.
Coins show the current monarch’s head in
profile. When the monarch dies, the next king or queen is
shown with their profile facing in the opposite direction.
So Queen Elizabeth II’s father, King George VI, faced to
the left, while she faces to the right.
The monarch’s portrait changes as they get older. Queen
Elizabeth’s profile has changed three times since 1953.
Do you think there are more £1 coins or more £2 coins in circulation in the UK?
What about 20p coins in comparison with 50p coins?
As at 31 March 2009, there were in circulation:
1,483 million x £1 coins;
333 million x £2 coins;
2,399 million x 20p coins; and
842 million x 50p coins.
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Principles of Money
Activity 1b
Visit www.royalmint.com to find the numbers of other coins in circulation (10p, 5p,
2p and 1p) and their total value.
Activity 1c
Look at the coins in your pocket. What dates do they have on them? Who in your
class or group has the oldest coin?
In November 2008, a number of 20p coins
were made incorrectly: they had no date on them. This
affected fewer than 250,000 of 20p coins, out of a total
of 136 million of the 20p coins minted (made) in 2008.
Banknotes
Higher denominations are made in the form of banknotes
rather than coins so that we do not have to carry around
pockets full of change. Imagine if you were to have £500
in your wallet or purse and you had to carry it around in
£1 or £2 coins. Purses would need to be the size of
rucksacks and men’s trousers would need to be
reinforced!
The paper of which banknotes are made is very special: it is hard to tear and can
withstand moisture. It can usually even withstand a cycle in the washing machine.
Banknotes are printed in a very secure factory, making it very difficult to steal or copy
them.
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One side of all banknotes shows the monarch’s head (presently, Queen Elizabeth II); the
other side shows another famous person. These famous people change every now and
again.
At the moment:
£5 notes show Elizabeth Fry, prison reformer;
£10 notes show Charles Darwin, scientist;
£20 notes show Adam Smith, economist; and
£50 notes show Sir John Houblon, first Governor of the Bank of England.
On every banknote is written ‘I PROMISE TO PAY THE BEARER ON DEMAND THE
SUM OF [AMOUNT]’ – a pledge that is signed by the Chief Executive on behalf of the
Governor of the Bank of England.
This statement and promise is left over from the days when people could take their
banknotes to the Bank of England and exchange them for gold to the same value. It was a
promise made by the Bank of England that the banknotes would always be worth the
value stated on the front. In this way, those people who had always held their wealth in
the form of gold were given the confidence that the newly introduced paper money was
worth just as much – because they could always swap it back to gold if they were to want
to do so.
Activity 1d
Use the Internet to find out whether there is such thing as a £100 note.
Find out also when the £1 note was withdrawn from circulation in the UK.
Coins, banknotes and giving change
Activity 1e
If you were to want to pay someone £1.50, what coins might you use?
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Principles of Money
Activity 1f
Think about how you might make up the amounts shown in the table below using
the fewest notes and coins. Complete the table to show which notes and coins you
would use.
The first entry has been completed for you as an example.
Amount
Notes
Coins
£2.50
None
1 x £2
1 x 50p
£3.60
£8.09
£12.45
£31.59
£67.83
It is important to check the change that is given to us in shops. The till will usually help
the sales assistant to work out how much change to give, but it does not show which
coins to use and the sales assistant sometimes gets it wrong.
Do you always check your change?
If you do not check your change until you have left the shop, it can be difficult to prove
that you were given the incorrect change. Some checkouts have a sign that says
something like:
Check your change before leaving the shop!
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Activity 1g
Work out the change that you would expect to receive when paying the amounts
listed in the table below. Then work out how that change might be given to you
using the fewest notes and coins.
The first entry has been completed for you as an example.
Amount paid
Denomination
paid
Change received
Denomination
received
£2.50
1 x £5 note
£2.50
1 x £2 coin
1 x 50p coin
£3.94
4 x £1 coins
£7.79
£10 note
£11.43
3 x £5 notes
£14.27
1 x £20 note
£36.21
2 x £20 notes
£55.69
1 x £50 note
1 x £10 note
£88.60
1 x £50 note
2 x £20 notes
Electronic balances
We do not want to carry all of our money around with us,
so we put some of it somewhere safe, such as in a bank
account. You and your bank will keep a record of how
much money it is looking after for you. This record will be
stored electronically.
You can check how much you have in your bank account by
using an automatic teller machine (ATM – at which we will
look in Topic 7), or by using Internet banking (that is, by
visiting the bank’s website and looking at your own bank
account online, using a password).
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Principles of Money
You can use plastic cards (known as ‘debit cards’) rather than coins or banknotes to pay
for things using the money that you have in your bank account. You can also move money
from one bank to another without moving any cash.
Slang for money
People use lots of different words to mean money. They use ‘slang’ words because it
shows that they belong to a certain social group, and because it is easy and fun.
As well as words meaning money in general, there are also a range of different slang
words and phrases that are commonly used to mean certain amounts of money in
particular, including the following.
£0
Not a sausage (from ‘sausage £20
and mash’ meaning cash)
Score
Bobby Moore
£1
Nugget (ie a small lump of gold)
£50
Half a ton (see below)
Bullseye (worth 50 points in darts)
McGarrett
£4
Desmond (Tutu)
£100
Ton
One-er
C-note
£5
Fiver
MacGyver
Lady Godiva
Deep-sea diver
£1,000
Grand
Bag of sand
K
£10
Tenner
Pavarotti
Ayrton Senna (or ‘Ayrton’)
£1m
Bernie (Ecclestone)
Which of the following animals do you think might
represent the largest amount of money?
•
A pony
•
A monkey
•
A gorilla
Activity 1h
List as many words as you can think of that mean ‘money’.
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You will spot that a lot of these words and phrases derive from cockney rhyming slang.
Other origins of the slang words and phrases include:
things that you can buy with money – for
example, ‘bread’, ‘dough’, or ‘dosh’ (meaning a
room in a doss house);
abbreviations – ‘k’ is short for kilo (meaning 1,000), while ‘C’ is the Roman
numeral meaning 100;
sounds – ‘ker-ching’ for a cash register, or ‘smackers’ for the noise of a pile of
notes being slapped down on a table;
visual links – for example, ‘shrapnel’ because coins look like bits of metal,
‘telephone numbers’ because the figures are large, and (arguably) ‘monkey’ and
‘pony’ appear to come from the days of the British Empire, during which people
became familiar with the former shown on a 500 rupee note and the latter on a
25 rupee note (‘gorilla’ being used to mean £1,000 because it is twice as big as a
monkey);
history – that is, things that were used for
money in the past such as ‘bread’, ‘shells’ (we
talk about ‘shelling out for something’) and
‘bucks’ because buckskins were used for money
in frontier America (in the mid-18th century),
and things that were used to count with, such as
‘beans’;
other languages – for example, ‘quid’ is short for the Latin quid pro quo, which
means to exchange one thing for something else, ‘pennies’ is derived from the
Anglo-Saxon word pening meaning money, ‘shekels’ are Israel’s currency and
‘wonga’ probably comes from the Romany wanga meaning coal; and
people’s names – for example, ‘Desmond’ (£4) after Desmond Tutu (that is, ‘2 +
2’), ‘Pavarotti’ (£10) because he was a famous ‘tenor’ (opera singer), ‘MacGyver’
(£5) after the TV character, ‘McGarrett’ (£50) after the character in the TV
show Hawaii 5-0 and ‘Bernie’ (£1m) because Bernie Ecclestone (of Formula One
racing) famously donated £1m to the Labour Party.
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Principles of Money
Review questions
1.
What are the characteristics (that is, features) of money?
2.
Why does a blanket not meet all of the requirements that will allow it to be
accepted as money?
3.
Why did people need to weigh early gold coins?
4.
What does ‘denomination’ mean?
5.
What is pictured on UK coins?
6.
Why do we have banknotes for higher denominations?
7.
What is an electronic balance?
8.
Why do people use slang words for money?
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Learning activities
Internet
•
Find out about gold by searching on the Internet.
•
Visit www.goldprice.org and find out what the price of gold per gram is today.
•
Use the Internet to investigate what a range of old words for money mean and
where they come from: for example, ‘brass’, ‘tanner’, ‘Oxford’, ‘joey’, ‘sov’,
‘bottle’, ‘carpet’ and ‘rofe’ (or ‘French loaf’).
Group
Suppose your class wants to use its own type of money for trading between itself and the
rest of the school. What item would you use to be your ‘money’ and why? (Remember
that money must be easily recognisable, accepted by everyone, available in different
amounts, hardwearing and always worth the same amount.)
Individual
•
Talk to family and friends about their experiences of different countries and
cultures. What differences and similarities did they notice between the different
types of money?
•
Ask your friends and family to list any different words that they have heard or
used to mean money.
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Principles of Money
Key points for Topic 1
You should now understand:
how to define money;
the features of money;
the different denominations of UK coins and banknotes;
the difference between cash and electronic balances;
some of the slang words for money and their origins.
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