Money and payments
Inflation: measurement and impact on your personal financesMoney is an integral part of our economy.
It is a widely accepted medium of exchange. We can use it to buy and pay for a wide range of things we need or would like to have. With money, we can pay for daily necessities, save up for emergencies and build up wealth.
We can also use money to make investments to pursue long-term financial goals. By investing in our own education, for example, we can improve our income situation in the long term. Handling money wisely can significantly improve our financial well-being and our quality of life. So it is worth the effort.
Even though the way we handle money has changed considerably over time, money remains the key medium of exchange in the economy. Without money, our modern economy simply would not work. Money as a medium of exchange explains how money evolved, what forms of money there are and how we determine its value.
The value of money fluctuates over time. When the prices of many goods and services rise over a longer period of time and the value of money declines accordingly, we speak of “inflation.” Money and its value (inflation) explains the consequences inflation has for the economy, the role central banks play in controlling price levels, and the causes of inflation. Measuring inflation shows how inflation is measured and what effects it can have on individuals (personal inflation rate). It also shows you the options available in times of high inflation.
Making payments: How can you make payments?
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Some people have more money at their disposal than they need for their current payments and they want to save up. Other people may, for a variety of reasons, need more money than they currently have access to. Money and its price (interest) shows how banks mediate between savers and borrowers. It also explains what role interest, the European Central Bank (ECB) and the key interest rate play in this context.
Many European countries use the euro as their currency. Foreign currency payments are still important, however; see Money and currencies (foreign currencies) for details.
Today, we can choose from a wide range of payment options: We can pay with cash, debit cards or credit cards or we can use online banking or payment services like from known big tech companies. Your payment options highlights what you should consider when using these different payment options.
