Introduction to Personal Economics: The Purpose of Money

Professor Dave introduces personal economics, focusing on understanding money's role in making better choices. Money serves as a medium of exchange, unit of account, and store of value. Bartering is impractical, highlighting money's importance in transactions. Money helps compare values and retains value over time, though inflation can affect purchasing power. Budgeting is crucial for managing money, with a suggested allocation of 80% for needs, 10% for wants, and 10% for savings. Money is a tool for building wealth and achieving economic freedom.

What is the significance of inflation on the value of money?

Describe the budgeting strategy suggested for managing money.