Understanding the Money Value of Time

Jun 18, 2023 | Budget

Four people walk and ride bicycles on a beach, enjoying the sunny weather. The text on the left reads "Understanding the Money Value of Time," with the logo of Stewardship Trust Advisors, emphasizing how precious moments can translate to meaningful investments.

In the realm of financial planning, time is our most valuable asset. Understanding the money value of time is essential to achieving your financial goals.

Time is available to all of us, providing each individual with the same opportunity to optimize its value in building wealth. It’s the only resource we all have over which we have some degree of control. However, it is a wasting resource if it is not optimally utilized. Each day that passes, without some contribution of money, either in savings or interest, the cost of our financial goals increases. As time marches on, the obstacles to achieving goals of any time horizon become increasingly insurmountable.

The more time money has to work, the less it needs to grow; meaning, there is less need to have to generate high rates of return which almost always requires assuming greater risks. Given enough time, money will let the compounding of interest work its exponential magic; so, there is less need for higher, riskier rates of return. Therefore, it can be said that, by waiting to start saving or investing, the costs of achieving your goals increase – either in actual dollars required to achieved them or in the amount of risk you will have to assume to “catch up.”

The Cost of Waiting

The cost of waiting is best illustrated with a comparison of two savers – Joe and Bill. Joe invests $20,000 per year from age 25 to 45, before he stops making any more contributions to his retirement plan. Bill doesn’t invest from age 25 to 45, but then contributes $20,000 per year from age 45 to 65. Assuming an investment return of 6%, by age 65, Joe would have $2,500,000, whereas Bill would only have $790,000!

Time can help us overcome the other inevitable obstacles to achieving our financial goals:


Inflation is one of time’s worst enemies. The longer the time horizon, the longer inflation can eat away at the true value of money. At a normal inflation rate of 3%, the value of money is cut in half after 23 years. The cost of financial goals must incorporate the cost of inflation when calculating how much savings will be required to achieve them.

With enough time to allow your earnings on savings to compound, your savings growth will have a much greater capacity to match or exceed the rate of inflation.


Taxes are the one certainty of life that can obstruct your progress towards reaching your goals. The good news is that, with the proper planning and the use of the right tools, they can be minimized to reduce their impact. Consider the effect on your long-term savings (aided by the time value of money) when you can convert tax dollars into savings dollars.


Yes, life happens, and very rarely in the way we anticipate, which is why financial goals must be defined, calculated, measured and reviewed frequently so that the necessary adjustments can be made to keep you on the right road when life throws you a curve. Time gives us the ability to assess, adjust, and get back on track.

Call Stewardship Trust Advisors

The number of people approaching retirement unprepared and underfunded is increasing at an alarming rate. While many will point to stock market or real estate crashes, or the unexpected, or some other reason they couldn’t save enough, you can bet that procrastination and the misunderstanding of time as an asset was a key element in their failure.

Understanding the money value of time is essential. At Stewardship Trust Advisors, we want to help you work with time to prepare for your future. Schedule a consultation today.

These weekly articles which are produced and distributed by Pilgrims Capital Advisors, Inc. contain information on topics about investing, tax planning, estate planning, asset allocation, insurance and many other financial subjects. Please note that they are very general in nature and must be applied to your own individual circumstances through the services of a trained or licensed professional that specializes in these areas. If you have questions or needs related to the subject matter of this article please contact us by clicking on the link below and we will point you in the right direction.

Pilgrims Capital Advisors, Inc. is a Registered Investment Advisory Firm located in the state of Michigan.

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