Just another 5 year-old who needs help.
In: Economics
It’s about interest, and how money ‘grows’ over time because it can collect interest.
If you have $2000, that’s great; you can buy $2000 worth of stuff.
But if you get $2000 right now and put it in a savings account for a year, you’ll get like 1.5% interest on it so after a year it’s worth $2030. Let it sit for two years, and it’ll grow to $2060.45.
Based on math like that, people will say things like “$2000 now, is worth as much as $2060.45 in two years”.
The general TVM idea is “it’s better to get money sooner because you could potentially get some interest on it”, and if you want to get specific you have to do some interest calculations and then you can say “this much money now = that much money in 5 years”, or whatever.
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