Additional Math Pages & Resources

Friday, October 16, 2009

Want to Buy Some Money?

Sounds funny, doesn't it? Buying Money. But people do it all the time.

How? you say, and why? And at what price?

It's not always easy to count the cost or know the price. But since we are math fans, we'll consider that as we look at some of the many ways we buy money.

Suppose you are having a yard sale. You know there are lots of small items, and you will need change. You go down to the ATM, then remember it only gives you $20 bills. So you walk into the bank, hand the cashier 5 $20 bills, and ask for $100 in small bills and a few rolls of quarters.

In this kind of situation you should not have to pay extra for the money you are buying.

You have a coin collection. You want an uncirculated coin, or a mint set. Or a rare bill. You go to a coin collector's shop, or you go to the website of the US Mint . If you want paper money, you go to the Bureau of Engraving and Printing's Money Factory.

Most of the items they sell are in pristine condition, perhaps specially-manufactured for collectors, and so they cost more than the face value of the coin or bill. For example, a new, un-circulated roll of 25 $1 coins costs $35.

Nowadays you can't easily get really large bills, like this thousand-dollar bill. The widespread use of checks and now electronic payment methods reduced the need for large bills.

If you are going on vacation in a foreign country, you might want to have some of their paper money on hand when you arrive. If it's a commonly-visited country, you can buy the money from your local bank, or from a company that specializes in "foreign exchange". They can mail you the money, or if you do wait until the last minute, you could buy it at a small booth in most international airports.

In addition to taking physical money, you might also need to send money to someone overseas. In that case you need to have it delivered to them directly or to their bank account. The most common way of doing that is called "wiring the funds" where your bank exchanges money with their bank (for a fee).  Other ways include using Western Union, or Paypal, or another exchange service.

Any time you purchase foreign money you have to pay at least one or more fees. There's normally a  convenience charge for giving you the money, and there is an exchange rate margin where they buy the money for less than they sell it to you, and pocket the difference. The smaller the amount you change, the greater the percentage of the charges will be. In many cases if you come home with a small amount of foreign currency, you will not be able to sell it. So consider it a souvenir, or send it back to someone in the country who can spend it. Or leave it on the airplane in the UNESCO envelope.

It's always more fun to get real money when you are a kid. Checks aren't very nice, because you have to give them to your parents, or go to the bank and try to get cash. As a parent or grandparent, it's also more fun to get lots of brand-new bills, put them in envelopes, and hand them out. You can also get rolls of coins which are great fun too. The best place to get brand new money is at a big bank, or the Mint or Money Factory.

In case you are interested, the Mint is having a sale (sounds funny, doesn't it?) on dollar coins. You can buy up to $500 each of newly-released Presidential dollar coins (Washington, Adams, Jefferson, etc.) for the face value, and the mint will ship them free, directly to your house in a box. What fun! A box of money...

If you are a business, you might have cash registers or vending machines, and collect lots of coins. In that case you want to change those coins into paper money for your cash register, or credit in your bank account.

Banks don't like to accept huge piles of coins, so a business might need a coin-counting machine to sort the coins, count them, and put them into rolls. The bank will credit your account for the rolls only if you do business with them regularly.

In this case, you are just like the business, only you don't have a trustworthy record of correctly filling rolls of coins. If you roll the coins, the bank might just open them all and charge you for counting them. So you might be better off letting them do it in the first place.

Alternatively you could use a coin-counting machine like you see in the front of the grocery store. They charge a lot for the convenience, though - a few hundred dollars  changed in the machine will cost you as much in fees as a small counting machine.

This isn't exactly the same thing as buying money, but it is possible to generate money by collecting bottles or cans and exchanging them for cash at a recycling yard. Containers which require a deposit are "as good as cash" to those who find them.

Of course there are lots of other things to trade for money. Like WORK.

It is important to remember that the two ways NOT to get money are

1. Make it yourself (unless you are a government)!
2. Take it without asking permission (unless you are a government)?

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