ABSTRACT

We’ll start with an analogy. Suppose that you get a hundred dollars (as a paycheck, a gift, or some other source), and suppose that you buy an item that costs fty dollars. Now, what happened to the other fty dollars? Of course it didn’t disappear or “evaporate”; this is money that you have saved, whether by keeping it on your person or by actually putting it into your bank account. You have stored that remaining fty dollars someplace. If we express this relationship mathematically, we could write

− =in used storedMoney Money Money

But now let’s take another example. Suppose that again you get a hundred dollars from some source, and you want to buy some item that costs $125. This transaction is not possible unless you are able to come up with the “missing” $25. In this example, the “money stored,” as would be calculated from the simple equation shown earlier, is actually a negative number, −$25. What does the negative number mean? The “missing” $25 has to be provided by removing it (as implied by the minus sign) from the money you have saved or “stored” earlier; in other words, the total amount of money you have in savings goes down.