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The British Pound, US Dollar, European Euro, Japanese Yen; they are all examples of currency, the official money of a country.

Every country has their own, some even share the same type or name. However, not every currency has the same value.

The currency you are probably most familiar with is the British Pound Sterling, which is represented using the symbols £ (pounds) and p (pence), with 100p equal to £1.00. Today's coins are 1 penny, 2 pence, 5 pence, 10 pence, 20 pence, 50 pence, £1 and £2. The notes are £5, £10, £20 and £50.

You can keep this money yourself and pay using the coins and notes, or transfer the money from your bank account to the shop by using a debit card or cheque.

Depending on the cost, you could also choose to spread the amount you pay over a longer period of time by using a credit card or money from a loan.

Paying for things

We can use a combination of coins and notes every day to pay for goods and services of any value. For example, if you purchase a new computer game from a shop in Belfast for £65.50, you could pay the exact amount using a £50, £10 and £5 note, with a 50p coin. You could also choose to pay with a total greater than the actual price, such as £70 (£50 and £20 notes). Luckily, you will receive change (money returned after paying for something with more money than it costs).

Different currencies

If you were to travel to a different country, the exact same game that you bought in Belfast for £65.50 would cost a different amount in a new currency. For example, to buy the game in Spain might cost 77 Euros or €77.00. In America, it would cost 91 Dollars or $91.00. This is because when you go abroad you need to change your money to the currency of the country you visit, in this case from British Pound Sterling to European Euros or US Dollars. This is known as the foreign exchange rate, which compares the worth of one countries currency to another.

No matter where you live in the world, money plays a key role in our lives. The important thing to learn is how to use it wisely.