What Is Money? Coins, Dollar Bills, and Digital Payments: First Grade Social
Money is an officially recognized medium of exchange that allows people to buy goods and services easily, fairly, and reliably without trading physical items directly.
Why Do We Have Money?
Imagine if you wanted to buy a loaf of bread, but you only had a wagon full of wooden toy blocks. You would have to find a baker who not only had extra bread, but also desperately wanted your toy blocks! That would be exhausting and inconvenient. Money solves this problem by giving everyone an agreed-upon currency that all stores and workers accept.
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| WHAT IS MONEY USED FOR? |
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| Medium of Exchange | Buy and sell any good or service |
| Unit of Measure | Tells how much an item is worth ($) |
| Store of Value | Can be saved in a piggy bank or bank |
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The Three Forms of Modern Money
Today, money exists in three primary forms: shiny metal coins, durable paper dollar bills, and digital electronic payments made through bank cards and computers.
THE 3 FORMS OF MONEY
[ COINS ] Metal disks for small values (Cents)
[ DOLLAR BILLS ] Paper currency for whole dollars
[ DIGITAL MONEY ] Electronic numbers transferred by card/phone
United States Coins: Small Change with Big Value
Coins are made of sturdy metals like copper and nickel. In the United States, each coin has a specific name, picture, and value measured in cents. The symbol for cents is the letter "c" with a slash through it: ¢. One hundred cents equal one whole dollar (100¢ = $1.00).
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| COIN NAME | VALUE | PORTRAIT ON FRONT | BUILDING/ART ON BACK |
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| Penny | 1 cent | Abraham Lincoln | Union Shield |
| Nickel | 5 cents | Thomas Jefferson | Monticello Estate |
| Dime | 10 cents| Franklin Roosevelt | Torch, Olive Branch |
| Quarter | 25 cents| George Washington | Eagle or State Parks |
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The Penny (1¢)
The penny is the only coin that has a reddish-copper color. It is made of copper-plated zinc and is worth 1 cent. The front shows President Abraham Lincoln. It takes one hundred pennies to make one single dollar.
The Nickel (5¢)
The nickel is a thick silver-colored coin worth 5 cents. It features President Thomas Jefferson on the front and his historic home, Monticello, on the back. One nickel is equal in value to five copper pennies.
The Dime (10¢)
The dime is the thinnest and physically smallest of all American coins, yet it is worth 10 cents! It features President Franklin D. Roosevelt on the front. Two nickels or ten pennies equal the value of one dime.
The Quarter (25¢)
The quarter is a larger silver-colored coin worth 25 cents. The front features our first president, George Washington. Because four quarters equal one dollar (25 + 25 + 25 + 25 = 100), it is called a quarter!
HOW COINS COMBINE TO $1.00
100 Pennies (1¢ each) ==============================> $1.00
20 Nickels (5¢ each) ==============================> $1.00
10 Dimes (10¢ each) ==============================> $1.00
4 Quarters (25¢ each) ==============================> $1.00
Paper Dollar Bills: The Greenbacks
For larger purchases, people use paper currency called dollar bills. American dollar bills are printed on durable paper made of linen and cotton, and they are green and black. The symbol for dollars is the dollar sign: $.
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| BILL | PORTRAIT ON FRONT | LANDMARK ON BACK |
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| $1 Bill | George Washington | Great Seal of the U.S. |
| $5 Bill | Abraham Lincoln | Lincoln Memorial |
| $10 Bill | Alexander Hamilton | U.S. Treasury Building |
| $20 Bill | Andrew Jackson | The White House |
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Security and Counting Bills
Dollar bills have special security features like intricate borders, watermarks, and green ink to prevent counterfeiters from copying them. When you combine dollar bills, you simply add: two $5 bills equal one $10 bill, and five $20 bills equal one $100 bill.
Digital Payments: Plastic Cards and Pixels
Today, many people rarely carry paper bills or heavy pockets of coins. Instead, they use digital money.
Debit and Credit Cards
Adults often pay with plastic cards with shiny electronic computer chips. When a shopper taps their card on a store register, computer networks transfer the exact dollar amount from the buyer's bank account directly to the store's bank account.
THE DIGITAL PAYMENT FLOW
[ Tap Plastic Card ] ---> [ Bank Computes Dollars ] ---> [ Store Paid! ]
at register transfers electronically Instant!
Digital Money Is Real Money!
It is vital to remember that plastic cards and smartphones are not magical free passes. Every dollar spent on a card comes from real money that an adult worked hard to earn and store in their bank account.
Exercises and Review
Exercise 1: List the four common United States coins in order from least value to greatest value, stating how many cents each coin is worth.
Exercise 1 Solution: In order from least to greatest value, the coins are: Penny (worth 1 cent), Nickel (worth 5 cents), Dime (worth 10 cents), and Quarter (worth 25 cents).
Exercise 2: How many quarters does it take to equal one whole dollar bill, and why is this coin called a "quarter"?
Exercise 2 Solution: It takes four quarters to equal one dollar bill (25¢ + 25¢ + 25¢ + 25¢ = 100¢). It is called a quarter because each coin represents one quarter (one-fourth) of a complete dollar.