Money, at its core, is a way of exchanging what you’ve got with what you want. Over the generations it’s been made of clay, leather, paper, bamboo and metal. 

Nowadays money (in the UK anyway) ‘paper’ money is made of plastic and most of our financial transactions are made digitally with no actual physical exchange of anything.

You can see why money exists. 

If we take it back to the most simplest terms…If I’m a pig farmer and I want to sell a pig because I’d love to buy some cabbages, I need to find someone with the goods I want (cabbages) with something I’ve got (Pigs), although I now find myself wondering how many cabbages I’d get for a pig!

The challenge, particularly as societies over time became more complex, was finding the person who wanted to swap the good (or service) you needed with the good (or service) you wanted was increasingly difficult so a way to externally measure the value of your good or service had to be devised.

Hence Money was born. The form of money has fundamentally over thousands of years…but it’s function hasn’t changed. As it’s core it’s still a way to swap what we’re got (skills, expertise and knowledge translated into goods and services) with what we want (other goods and services).

However as societies have become more complex so has the way we treat money. Long gone are the days of swapping a pig for a cabbage. Nowadays thinking about money is more complex.

The human systems we’ve built around money include tax, investing and banking. We’ve got lending and borrowing, we’ve got trading and speculation. We’ve got entrepreneurship, countries running their own banks, financial institutions having the ability to borrow a lot more money than they hold in deposits,

We’ve got the physical representation of money, both paper (although it’s actually plastic) and metal…which are only physical promises of exchange. We’ve also got electronic transactions which send these promises of exchange across the internet at a pace the farmers simply swapping a pig for a load of cabbages would never even start to understand.

and I’ve not even started talking about Cryptocurrency.

So, the systems we’ve built around the management of money are wide ranging and pretty complicated.

However, whilst there’s clearly no need to make money any more mentally complex than we need it to be, us humans never make it easy for ourselves do we!

After all, we’ve built fantastically complex systems around managing money, we also tend to tell ourselves, and others, stories about the world to make sense of what’s going on. Some of these stories empower us and others can be debilitating.

Think of the stories we tell ourselves about money…

“Money is the root of evil” 

“The rich get richer. The poor get poorer”.

“You need to ‘speculate’ to ‘accumulate’”.

“Money makes us happy” or “Money can’t buy happiness”

“Money – Easy come / Easy go” or it’s polar opposite “We need to squirrel every spare penny for a ‘rainy day’”

“I don’t deserve to be financially independent, or wealthy”.

“We don’t need money” or “Money solves all ills”

Or even, a story many in western society believe but, maybe controversially isn’t remotely true.

“The more money you’ve got the more ‘successful’ you are”

They’re all stories we tell ourselves but whilst you can prove some of these stories with examples some of the time, they’re not universally true. 

They’re just stories.

I wonder if asking ourselves a more fundamental important question might be the route to a better relationship with money. 

Chris Budd, host of the financial wellbeing podcast, and an all round great bloke, I believe put’s it best…

“Work out what makes you happy, and spend money on that”

Whilst our relationships with money might never be that straightforward, perhaps going back to basics and understanding money as a simple exchange between what we’ve got and what we want in our lives might provide us with a useful insight.

What do you think?