Time Value of Money

The phrase “time value of money” typically refers to a mathematical calculation that compares the value of a dollar today to the value of that same dollar at some point in the future. Important, for sure, but pretty dry.

Today, however, I’d like to use the phrase to discuss what I feel is the real purpose of our money: giving us the time and opportunity to do the things we love.

This topic was inspired by an excellent post on a site I read regularly, www.getrichslowly.org. It’s a touching column on advice received from a recent widower. The main point is that time is a precious resource. There are only so many days available in which you can enjoy the things you cherish most. It’s one of those things that’s often only realized late in life, but if learned early can make all the difference in enjoying what you have.

I think this point is so important. I write here about money, but finances are really only a tool. Bigger bank accounts and solid investments are not an end in of themselves. They are valuable in that they allow us more choice in how we live our lives going forward. It’s much easier to make the choice to spend more time with our family, or make a risky but enjoyable career move, if we have previously saved well and have a safety net to support us.

For me, there are several big motivations for building financial security. The first one is making sure that my children always have their food, shelter, health and education provided for. The second is that when they want to explore their options to find what they love, whether that means playing a sport, taking up an instrument, or taking a class on something outside of school, I want to be able to support those endeavors. And finally, I want to be financially secure enough that I can spend time with my family without worrying about the first two factors.

None of these goals involve having any specific amount of money. I don’t specifically care about being a millionaire or having the most successful career. However, I do know that working smart and saving well today will likely have the effect of advancing my career and building my bank accounts, and that these side effects will give me the flexibility to make decisions that advance my true goals.

It’s so important when you start down the path of financial fitness that you have your true goals in mind. It’s not enough to feel like you want to accumulate more money. You need to know why you’re doing so. You may even find that, depending on what your true goals are, you may not even need to save as much as you though. But no matter what, spend the time to figure out what’s important to you. If you’re not thinking about it now, when will you ever figure it out?