How Does TIME VALUE OF MONEY (PART 1) Work?

Time value of money means money now is better than money later, just like a cookie today is better than a cookie tomorrow.

Imagine you have $10 in your piggy bank. If you leave it there, next year you’ll still have $10, but if you put that $10 into a jar with some special beans (called interest), by next year you might have $11! That’s because the beans grow and give you extra money.

Think of time like a playground. If you get to play right away, you’re happy now, but if you wait, maybe the slide gets bigger or there are more swings. Similarly, money today can work harder for you over time, like having more toys to play with later.

If your friend promises to give you $10 next year instead of now, it might feel like they're giving you a smaller toy, because you could have grown that $10 into something bigger by waiting.

So, the longer money stays in a jar or bank, the more it can grow with time. That’s how time value of money works!