I got lucky today when I was told I could cash out some unused leave or leave it and cash it out when I quit or retire. At first, I wasn’t quite too sure what to make of this good fortune. With 10 years left to retire, I thought about leaving it alone. I figured that my salary would surely be higher than today thus increasing the actual amount of money that would come my way. I looked at it as a long-term savings plan. But, then again, I could find ways to use the money now. I was in a conundrum. What to do?
How do I know the value of the money I have now and in the future? To figure this out, I turned to my good Spanish friend, Martin de Azpilcueta, who developed the concept of the time value of money to help understand what our money is worth today and tomorrow in relative terms. Incredibly, he developed this concept hundreds of years ago in the early 1500s.
The value of money today has a future value that’s the same as today. Let’s look at what this means. For example, $100 today, invested at 10% for one year will be worth $110 one year from now. Most of us would assume that the value of the $100 invested at 10% and paid in one year is now worth more than the $100 I started out with. Not so. If we compare these two, the $100 today is the same value as the $110 paid one year from now. Why is this? It’s because of the notion of the value over time. This core principle is that, as long as you gain value or earn interest (to increase the value of your investment), any amount of money is worth more the sooner it’s received.
This is an important aspect to understand. It’s an aspect that will help you break free from your long-held notions of postponing your life well into the future. Taking the money now will be worth more the sooner you begin to put it to use. So, there I had it. Thanks to Martin de Azpilceuta I decided to take the money now and live for today.
Do you have a time value of money problem?
Other Time Trading Gurus
Jana presents How To Align Yourself To Your Work And Achieve More posted at Blog, saying, “Oftentimes the things we want to achieve can be achieved with less action and more alignment. Here is how to align yourself to your work and achieve more by doing less.”
Marjorie Kowalczyk presents 5 Steps On How to Make Time For Yourself Even If You Are Busier Than the Busiest Bee | Daily Workhorse posted at Daily Workhorse.
Aloted Omoba presents Achieving Work Family Balance posted at Super Working Mum, saying, “Maintaining a a healthy work family balance is one concern almost every working mum I know has. You probably worry about this as well. Here are some tips to consider.”
Shaun Rosenberg presents Is Motivation A Trap? posted at Shaun Rosenberg, saying, “This article look into one of my favorite quotes of all time. “The whole idea of motivation is a trap. Forget motivation. Just do it.” by John C. Maxwell.”
Eran Eyal presents 6 Reasons why outsourcing development sucks for Startups posted at StartupHat – Eran Eyal on startups, raising funding, design, UX and Innovation, saying, “There’s a reason that the concept of ”Hackers and Founders” is entrenched as a concept – burned in the mind of all entrepreneurs in the tech space – it’s because not having a tech co-founder often drives the founder to outsource development.”
Theresa Torres presents Pay Off Debt or Save: Is It Better to Save Money? posted at CreditDonkey.com Tips, saying, “Undecided whether to pay off debt first or save? Here are some figures and scenarios to guide you.”
Mr.CBB presents Life, Money and Retirement~Skype Doesn’t Reach Heaven posted at Canadian Budget Binder, saying, “Sometimes we need to ask ourselves why we work so hard for all the money we make and whether we are spending our time wisely. Pouring your life into one basket risks leaving behind potential memories that you might not be able to go back and get. Take time to evaluate your life, your priorities and your future.”
John Schmoll presents Taking the Plunge: What the Hell Have I Done?! posted at Frugal Rules, saying, “You learn a lot about yourself when pressed up against a wall. I found myself in this situation last summer after starting our business. By persevering through it I was able to grow and seeing the value of not giving up on oneself”
Dale Shanklin presents Even the Best Get Rejected at the Wrong Time posted at Dale Shanklin’s Personal Development Blog, saying, “Good timing is perhaps the most crucial aspect of success. Dale Shanklin shares a story from Hollywood that proves this point. Even the best ideas can get rejected at the wrong time.”
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