Time Value of Money: Understanding the Power of Time in Financial Decisions

The time value of money (TVM) is a fundamental financial concept that explains how the value of money changes over time. A dollar today is worth more than a dollar in the future due to its potential earning capacity. Whether you’re investing, saving, or borrowing, understanding TVM helps you make better financial decisions by maximizing returns and minimizing costs. From interest rates to future value calculations, knowing the time value of money ensures that your wealth grows efficiently over time.