Money can be understood in terms of what many consider to be its main functions:(a) Medium of exchange;(b) Unit of value/money as information;(c) Store and transmitter of value.
Without money, if people want to exchange goods and services, they barter. "In exchange for filling my car's gas tank I'll work for you for an hour." In most cases this simply wouldn't work because party A doesn't want what party B has to offer in exchange. With the use of money as an intermediary (or go-between), a wider variety of transactions become possible, increasing the chances that more people will satisfy their needs.
To facilitate exchanges of goods and services, it helps if we have a sense of the worth or value of things. I might value my time at $15 an hour. In that case, if someone offers to pay me $15 an hour or more, I would consider working for him or her. If offered less, I would probably decline the offer. Similarly, I might value a loaf of bread at $1. Money as a unit or measure of value helps us to make better economic decisions. In the absence of money it would be much more difficult to make sensible economic and financial decisions. How things are currently priced by most people provides indispensable information for guiding economic and financial decisions.
The store-of-value function of money makes an important dimension to economic and financial life much easier. It enables us to produce a surplus in the present, to save the surplus, and to "move" it to different places or into the future. Money makes it easy to transfer value from place to place or present to future.
In Your Money or Your Life, Joe Dominguez and Vicki Robin provide four perspectives of money:(a) The street-level perspective (practical, physical realm);(b) The neighborhood perspective (emotional/psychological realm);(c) The citywide perspective (cultural realm);(d) The jet plane perspective (personal responsibility and transformation).
The street-level perspective (practical, physical realm) includes the physical aspects of notes and coins and all our financial transactions: allowances, jobs/paid employment, banking our checks, balancing our checking account, credit cards, insurance, buying a house, investing, assets and liabilities, etc.
The neighborhood perspective (emotional/psychological realm) includes beliefs and myths about money: what you have to do to get money, money as security, money as power, money as social acceptance, money as evil, etc. "Economic correctness" is at this level. So is money as a problem for couples to fight over and as a cause to break up their relationship. You can also get murdered for your money.
The three main functions of money I've described above can be assigned to the citywide perspective (cultural realm). So can "economic bogeymen" such as GNP (gross national product), CPI (consumer price index -- a measure of inflation), cost of living, recession, depression, economic expansion, bull and bear markets, etc.
