There are many sayings that get tossed around when it comes to money. Some people say, “The best things in life are free.” And by this they must be referring to character, virtue, and even friendship. It might come as a surprise that the path to friendship can sometimes come with a financial toll. While this isn’t true for every social group or activity it can be true for some.
After two years of phone calls with cable representatives, we finally cut the cable and increased our internet speed instead. We researched other options to see if we could save some dough and receive better service. I was spending more time on the phone than I wanted and time is money, right? We had to make decisions on what value we wanted to place on entertainment, and determine the price we were willing to pay.
In my Finance 101 class, my teacher taught us about the time value of money, also known as “present discounted value.” The general concept is this: the money in your change jar is worth more today than it will be tomorrow because it has opportunity to earn that extra day of interest. The time value of money is, for example, why the government loves sending you a tax refund. They know that you’ve loaned them free money each month, so any interest they gained could have been yours.