NCERT Textbook: Introduction to Financial Literacy | Financial Literacy for Class 6 PDF Download

 Page 1


Central Board of Secondary Education
Unit 2 
Introduction to Financial Literacy
The objective of this unit is to make students aware of basic financial concepts This 
unit focuses on:
• Evolution of trade and money
• The concept of barter system
• Needs and Wants
Learning Outcomes:
Location Learning Outcome Knowledge 
Evaluation
Performance 
Evaluation
Teaching and 
Training Method
Classroom/ 
Museum
Understand basic 
financial concepts
Explain the 
meaning of 
basic financial 
concepts
Demonstrate the 
understanding 
of basic finan -
cial concepts
Interactive 
Lecture: Basic 
financial terms
Activity: Search 
on the inter-
net to identify 
other types of 
accounts offered 
by banks, apart 
from the ones 
listed in this unit
 
Summarise the 
evolution of trade and 
money
Describe how 
trade and money 
evolved across 
the history of 
mankind
Articulate con-
cepts such as 
barter system 
and how they 
played a role in 
the evolution of 
trade and money
Interactive Lec-
ture: Evolution of 
trade and money
Activity: Explore 
the collection of 
ancient coins in 
a nearby mu-
seum. You can 
also explore 
online collections 
at http://www.
nationalmuseu-
mindia.gov.in/
Page 2


Central Board of Secondary Education
Unit 2 
Introduction to Financial Literacy
The objective of this unit is to make students aware of basic financial concepts This 
unit focuses on:
• Evolution of trade and money
• The concept of barter system
• Needs and Wants
Learning Outcomes:
Location Learning Outcome Knowledge 
Evaluation
Performance 
Evaluation
Teaching and 
Training Method
Classroom/ 
Museum
Understand basic 
financial concepts
Explain the 
meaning of 
basic financial 
concepts
Demonstrate the 
understanding 
of basic finan -
cial concepts
Interactive 
Lecture: Basic 
financial terms
Activity: Search 
on the inter-
net to identify 
other types of 
accounts offered 
by banks, apart 
from the ones 
listed in this unit
 
Summarise the 
evolution of trade and 
money
Describe how 
trade and money 
evolved across 
the history of 
mankind
Articulate con-
cepts such as 
barter system 
and how they 
played a role in 
the evolution of 
trade and money
Interactive Lec-
ture: Evolution of 
trade and money
Activity: Explore 
the collection of 
ancient coins in 
a nearby mu-
seum. You can 
also explore 
online collections 
at http://www.
nationalmuseu-
mindia.gov.in/
Central Board of Secondary Education
2.1 Understanding basic financial concepts
Money Money is a recognised medium of exchange in the economy.  It is an asset that can 
be stored and used in the form of currency, or as value.
Currency Currency is the physical form of money in the form of coins and rupees. Each country 
typically has its own currency as a medium of exchange, issued by the central bank. 
In India, the Government of India (GoI) and Reserve Bank of India (RBI) are the issu-
ers of the currency, i.e. Indian Rupees
Bank A bank is a government authorised financial institution which acts as a custodian of 
money deposited by account holders and uses the collected funds to extend loans to 
individuals and businesses while charging interest on the same. 
Account An account is a repository of the funds held by a bank on behalf of the account hold-
er. An account can be of various kinds, and is identified by a unique account number 
issued to the account holder.
Saving Savings is the amount of money that is remaining from income, after the expenses 
are made.
Investment An investment refers to an asset acquired with the objective of generating income or 
appreciation.
When you accompany your parents to the market, do you observe how they purchase 
the various items? Every purchase requires the use of money. 
As you are able to observe, money is the accepted medium of exchange. It allows 
you to buy the things you require, right from basic things such as bread to high-value 
products such as a car.
In our country, money is used in the form of Indian currency known as ‘Rupee’. You 
would surely have used ‘rupees’ when you buy food from the school canteen.
Page 3


Central Board of Secondary Education
Unit 2 
Introduction to Financial Literacy
The objective of this unit is to make students aware of basic financial concepts This 
unit focuses on:
• Evolution of trade and money
• The concept of barter system
• Needs and Wants
Learning Outcomes:
Location Learning Outcome Knowledge 
Evaluation
Performance 
Evaluation
Teaching and 
Training Method
Classroom/ 
Museum
Understand basic 
financial concepts
Explain the 
meaning of 
basic financial 
concepts
Demonstrate the 
understanding 
of basic finan -
cial concepts
Interactive 
Lecture: Basic 
financial terms
Activity: Search 
on the inter-
net to identify 
other types of 
accounts offered 
by banks, apart 
from the ones 
listed in this unit
 
Summarise the 
evolution of trade and 
money
Describe how 
trade and money 
evolved across 
the history of 
mankind
Articulate con-
cepts such as 
barter system 
and how they 
played a role in 
the evolution of 
trade and money
Interactive Lec-
ture: Evolution of 
trade and money
Activity: Explore 
the collection of 
ancient coins in 
a nearby mu-
seum. You can 
also explore 
online collections 
at http://www.
nationalmuseu-
mindia.gov.in/
Central Board of Secondary Education
2.1 Understanding basic financial concepts
Money Money is a recognised medium of exchange in the economy.  It is an asset that can 
be stored and used in the form of currency, or as value.
Currency Currency is the physical form of money in the form of coins and rupees. Each country 
typically has its own currency as a medium of exchange, issued by the central bank. 
In India, the Government of India (GoI) and Reserve Bank of India (RBI) are the issu-
ers of the currency, i.e. Indian Rupees
Bank A bank is a government authorised financial institution which acts as a custodian of 
money deposited by account holders and uses the collected funds to extend loans to 
individuals and businesses while charging interest on the same. 
Account An account is a repository of the funds held by a bank on behalf of the account hold-
er. An account can be of various kinds, and is identified by a unique account number 
issued to the account holder.
Saving Savings is the amount of money that is remaining from income, after the expenses 
are made.
Investment An investment refers to an asset acquired with the objective of generating income or 
appreciation.
When you accompany your parents to the market, do you observe how they purchase 
the various items? Every purchase requires the use of money. 
As you are able to observe, money is the accepted medium of exchange. It allows 
you to buy the things you require, right from basic things such as bread to high-value 
products such as a car.
In our country, money is used in the form of Indian currency known as ‘Rupee’. You 
would surely have used ‘rupees’ when you buy food from the school canteen.
Central Board of Secondary Education
2.2 Barter System
Historically speaking, humans have been transacting in goods much before money 
was invented. Have you ever wondered how these transactions took place?
The answer is ‘Barter System’. To understand the Barter System in a simple manner, 
consider this example:
Satya has two bags of wheat at his home; however, he needs only one of them for his 
monthly consumption. On the other hand, Ahmad has two bags of rice out of which he 
is able to spare one. So they meet and decide to exchange the bag of wheat with that 
of rice. After the barter exchange, Satya and Ahmad both have one bag of rice and 
wheat each to match their requirement of food.
Have you ever performed a simple barter exchange with your friend or cousin? For 
example, you have a pack of sketch pens that you do not need, and you exchange the 
same for a geometry box?
Page 4


Central Board of Secondary Education
Unit 2 
Introduction to Financial Literacy
The objective of this unit is to make students aware of basic financial concepts This 
unit focuses on:
• Evolution of trade and money
• The concept of barter system
• Needs and Wants
Learning Outcomes:
Location Learning Outcome Knowledge 
Evaluation
Performance 
Evaluation
Teaching and 
Training Method
Classroom/ 
Museum
Understand basic 
financial concepts
Explain the 
meaning of 
basic financial 
concepts
Demonstrate the 
understanding 
of basic finan -
cial concepts
Interactive 
Lecture: Basic 
financial terms
Activity: Search 
on the inter-
net to identify 
other types of 
accounts offered 
by banks, apart 
from the ones 
listed in this unit
 
Summarise the 
evolution of trade and 
money
Describe how 
trade and money 
evolved across 
the history of 
mankind
Articulate con-
cepts such as 
barter system 
and how they 
played a role in 
the evolution of 
trade and money
Interactive Lec-
ture: Evolution of 
trade and money
Activity: Explore 
the collection of 
ancient coins in 
a nearby mu-
seum. You can 
also explore 
online collections 
at http://www.
nationalmuseu-
mindia.gov.in/
Central Board of Secondary Education
2.1 Understanding basic financial concepts
Money Money is a recognised medium of exchange in the economy.  It is an asset that can 
be stored and used in the form of currency, or as value.
Currency Currency is the physical form of money in the form of coins and rupees. Each country 
typically has its own currency as a medium of exchange, issued by the central bank. 
In India, the Government of India (GoI) and Reserve Bank of India (RBI) are the issu-
ers of the currency, i.e. Indian Rupees
Bank A bank is a government authorised financial institution which acts as a custodian of 
money deposited by account holders and uses the collected funds to extend loans to 
individuals and businesses while charging interest on the same. 
Account An account is a repository of the funds held by a bank on behalf of the account hold-
er. An account can be of various kinds, and is identified by a unique account number 
issued to the account holder.
Saving Savings is the amount of money that is remaining from income, after the expenses 
are made.
Investment An investment refers to an asset acquired with the objective of generating income or 
appreciation.
When you accompany your parents to the market, do you observe how they purchase 
the various items? Every purchase requires the use of money. 
As you are able to observe, money is the accepted medium of exchange. It allows 
you to buy the things you require, right from basic things such as bread to high-value 
products such as a car.
In our country, money is used in the form of Indian currency known as ‘Rupee’. You 
would surely have used ‘rupees’ when you buy food from the school canteen.
Central Board of Secondary Education
2.2 Barter System
Historically speaking, humans have been transacting in goods much before money 
was invented. Have you ever wondered how these transactions took place?
The answer is ‘Barter System’. To understand the Barter System in a simple manner, 
consider this example:
Satya has two bags of wheat at his home; however, he needs only one of them for his 
monthly consumption. On the other hand, Ahmad has two bags of rice out of which he 
is able to spare one. So they meet and decide to exchange the bag of wheat with that 
of rice. After the barter exchange, Satya and Ahmad both have one bag of rice and 
wheat each to match their requirement of food.
Have you ever performed a simple barter exchange with your friend or cousin? For 
example, you have a pack of sketch pens that you do not need, and you exchange the 
same for a geometry box?
Central Board of Secondary Education
2.3 Needs and Wants
To better understand the Barter System, it is important to know the meaning of ‘Needs’ 
and ‘Wants’. In the Satya-Ahmad example, we can see that while Satya needs rice to 
meet the food requirements of his family, Ahmad needs a bag of wheat for the same 
purpose. However, rice and wheat are not their ‘wants’.
Let us try to understand the same through another example. When you feel hungry, 
you need food to satisfy your hunger. Therefore, food is your need. However, when 
you visit the market with your father and you feel tempted to have ice cream. In this 
situation, ice cream is not your ‘need.’ However, it is your ‘want.’
‘Needs’ are the essential requirements in our life such as food, clothes and house. On 
the other hand, ‘Wants’ are for the things you require to enhance the quality of your 
life, such as games, music and TVs.
2.4 Evolution of Trade 
Let us start by understanding the definition of trade.  Trade is a financial activity that 
includes buying and selling various goods and services between two or more people 
involved in the transaction. Trade can happen between organisations and countries 
as well. For example, India primarily exports products such as rice and jewellery, and 
imports petroleum and electronic components.
Page 5


Central Board of Secondary Education
Unit 2 
Introduction to Financial Literacy
The objective of this unit is to make students aware of basic financial concepts This 
unit focuses on:
• Evolution of trade and money
• The concept of barter system
• Needs and Wants
Learning Outcomes:
Location Learning Outcome Knowledge 
Evaluation
Performance 
Evaluation
Teaching and 
Training Method
Classroom/ 
Museum
Understand basic 
financial concepts
Explain the 
meaning of 
basic financial 
concepts
Demonstrate the 
understanding 
of basic finan -
cial concepts
Interactive 
Lecture: Basic 
financial terms
Activity: Search 
on the inter-
net to identify 
other types of 
accounts offered 
by banks, apart 
from the ones 
listed in this unit
 
Summarise the 
evolution of trade and 
money
Describe how 
trade and money 
evolved across 
the history of 
mankind
Articulate con-
cepts such as 
barter system 
and how they 
played a role in 
the evolution of 
trade and money
Interactive Lec-
ture: Evolution of 
trade and money
Activity: Explore 
the collection of 
ancient coins in 
a nearby mu-
seum. You can 
also explore 
online collections 
at http://www.
nationalmuseu-
mindia.gov.in/
Central Board of Secondary Education
2.1 Understanding basic financial concepts
Money Money is a recognised medium of exchange in the economy.  It is an asset that can 
be stored and used in the form of currency, or as value.
Currency Currency is the physical form of money in the form of coins and rupees. Each country 
typically has its own currency as a medium of exchange, issued by the central bank. 
In India, the Government of India (GoI) and Reserve Bank of India (RBI) are the issu-
ers of the currency, i.e. Indian Rupees
Bank A bank is a government authorised financial institution which acts as a custodian of 
money deposited by account holders and uses the collected funds to extend loans to 
individuals and businesses while charging interest on the same. 
Account An account is a repository of the funds held by a bank on behalf of the account hold-
er. An account can be of various kinds, and is identified by a unique account number 
issued to the account holder.
Saving Savings is the amount of money that is remaining from income, after the expenses 
are made.
Investment An investment refers to an asset acquired with the objective of generating income or 
appreciation.
When you accompany your parents to the market, do you observe how they purchase 
the various items? Every purchase requires the use of money. 
As you are able to observe, money is the accepted medium of exchange. It allows 
you to buy the things you require, right from basic things such as bread to high-value 
products such as a car.
In our country, money is used in the form of Indian currency known as ‘Rupee’. You 
would surely have used ‘rupees’ when you buy food from the school canteen.
Central Board of Secondary Education
2.2 Barter System
Historically speaking, humans have been transacting in goods much before money 
was invented. Have you ever wondered how these transactions took place?
The answer is ‘Barter System’. To understand the Barter System in a simple manner, 
consider this example:
Satya has two bags of wheat at his home; however, he needs only one of them for his 
monthly consumption. On the other hand, Ahmad has two bags of rice out of which he 
is able to spare one. So they meet and decide to exchange the bag of wheat with that 
of rice. After the barter exchange, Satya and Ahmad both have one bag of rice and 
wheat each to match their requirement of food.
Have you ever performed a simple barter exchange with your friend or cousin? For 
example, you have a pack of sketch pens that you do not need, and you exchange the 
same for a geometry box?
Central Board of Secondary Education
2.3 Needs and Wants
To better understand the Barter System, it is important to know the meaning of ‘Needs’ 
and ‘Wants’. In the Satya-Ahmad example, we can see that while Satya needs rice to 
meet the food requirements of his family, Ahmad needs a bag of wheat for the same 
purpose. However, rice and wheat are not their ‘wants’.
Let us try to understand the same through another example. When you feel hungry, 
you need food to satisfy your hunger. Therefore, food is your need. However, when 
you visit the market with your father and you feel tempted to have ice cream. In this 
situation, ice cream is not your ‘need.’ However, it is your ‘want.’
‘Needs’ are the essential requirements in our life such as food, clothes and house. On 
the other hand, ‘Wants’ are for the things you require to enhance the quality of your 
life, such as games, music and TVs.
2.4 Evolution of Trade 
Let us start by understanding the definition of trade.  Trade is a financial activity that 
includes buying and selling various goods and services between two or more people 
involved in the transaction. Trade can happen between organisations and countries 
as well. For example, India primarily exports products such as rice and jewellery, and 
imports petroleum and electronic components.
Central Board of Secondary Education
The evolution of trade across the world has been closely linked with the development 
of the money system. You would be surprised to know that trade across continents has 
been prevalent in our world, even in ancient times.
While ancient trade was based on the barter system, there is also evidence of com-
modities being used in the form of livestock, salt, metal, rare stones et cetera.
Pottery traditions were popular in parts of the world such as Japan, Korea, China, 
Mexico and many more. The Han Dynasty, which ruled China from 206 BC to 220 
AD, opened up the ‘Silk Road’ trading route between China and Central Asia. Various 
kinds of merchandise travelled along the Silk Road, making it one of the oldest routes 
of international trade in the world. 
The first non-stop voyages from Egypt to India were initiated at the start of the Com-
mon Era. Spices from India came in demand around the world and were the main 
exports to the western world. The spice trade led to new diplomatic  
relationships between East and West. It was partly with the spice  
trade in mind that Christopher set out in 1492 and discovered America.