How Money Travels! BO
written by
Mala Kumar
illustrated by Deepa
OK 2
Balsavar
Who makes this
money? How does money travel around the world? Why is a plant more valuable than
cut flowers?
Grandpa says he has received the money order! What does that mean?
Money makes the world go round, they say. Actually, it is money that goes around the world! We earn, save and use money in many ways. Money keeps changing hands. One day, Grandma gives Heera a ten-rupee note. The next day, Heera takes it to Uncle Chandu's shop, who takes the note and gives her a smart pen instead. He puts the note into his cash box, and in the evening he takes it to the bank. Every time money changes hands, a transaction takes place. Let us learn more about the many surprising ways in which money moves from one place to another. 2
Where does Money Go? What happened to Heera's money? After Heera gave the money to Uncle Chandu, where did that money go? The money moved from one place to another. The giving of money or the taking of money for a purpose is called a transaction. When Heera gives money to a shopkeeper to buy a pen, a transaction takes place. A transaction that involves money is called a monetary transaction. To put it simply, money is either given, or taken.
Coming in, Going out Transactions are of two kinds: receipts and payments. Sometimes money comes in to you. This transaction is called a receipt. Sometimes money goes away from you. This transaction is called a payment. All money is either paid in to somebody, or paid out by somebody.
BANK
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Money that you may get as a gift on festivals and birthdays from relatives is a receipt. The salary that your father or mother gets every month is a receipt. Let's see some receipts and how people receive money!
Selling shoes is a joy. It gets me an income.
I earn money by carrying bricks.
Sweet job! Fruits go out of my basket, money comes in!
You've earned money for helping me clean the scooter today.
I earn money by working on my computer!
I receive money to argue and fight for others in court.
Do juice bottles fetch more money than newspapers?
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Yay! A cash prize for running fastest in a race!
The money that you pay to the school as fees is a payment transaction. The money that you pay to the bus conductor so that you can travel in the bus is a payment.
School fees
Buying household goods
Rent
Books, chocolates, toys
Money paid for bus ticket
Is it all MY money? So, does it mean that all the money that I get or have is MY money? Not always! Some of the money that you get is not really yours. 5
Arun earns a salary of `15,000 a month. In the month of June, he needs extra money to buy school books, school bags and uniforms for his two children. So he borrows money in the form of a loan from a money lender. Both the salary and the loan are receipts. But the salary is his to be used as he pleases. It is called an income. The loan is also a receipt, but he has to return the amount along with a fee called interest. The loan is called a liability – something that has to be returned.
In money matters, interest is a sum paid or charged for the use of somebody else’s money NOW to be repaid to him LATER. When you borrow money, you have to pay back the amount along with interest. When you lend money, you will get back the amount along with an interest. When someone borrows money, the transaction is a receipt. But the borrower has to pay back the money. So this is a liability. 6