Episode 1120: The Value of Money

[00:00:00] Scott Maderer: Thanks for joining me on episode 1,120 of the inspired stewardship podcast.

[00:00:07] Dan Miller: Hi, I'm Dan Miller from 48 days.com. I challenge you to invest in yourself, invest in others, develop your influence and impact the world by using your time, your talent and your treasures. Deliv out your call. Having the ability to find the work you love is key.

[00:00:24] And one way to be inspired to do that is to listen to this inspired stewardship podcast with my friend, Scott Maderer

[00:00:33] Scott Maderer: and here, does it mean having a lot of money or doing any particular thing? Means are you setting it up where you feel like it's set up. In the way that you define your priorities and values, not the way anyone else defines it. That's why you have to work to really understand the value of money.

[00:00:57] Welcome, and thank you for joining us on the [00:01:00] inspired stewardship podcast. If you truly desire to become the person who God wants you to be, then you must learn to use your time, your talent and your treasures for your true. And the inspired stewardship podcast who will learn to invest in yourself, invest in others and develop your influence so that you can impact the world

[00:01:22] And today's episode about investing in yourself through stewarding your treasures. I talk with you about the time value of money. I share why money is worth both future value, but also present now. And why there is always tension between these two things as we talk about stewarding your treasures.

[00:01:40] Wouldn't it be great. If you could support this podcast and do it without costing yourself an extra day. It turns out you can't. All you have to do is use inspired stewardship.com/amazon. When you're ready to make a purchase via Amazon and a small commission, we'll come back to support the [00:02:00] show. If you enjoy the show, when you're ready to buy from Amazon, just use inspired stewardship.com/amazon.

[00:02:07] There's this idea in finance called the time value of money. The formula is a way of calculating. If I invest a certain amount of money today, what will it be worth using certain assumptions at a certain amount of years, this at a basic way is how whatever somebody is investing. They can say in 30 years I'll be a millionaire and it's an accurate.

[00:02:36] Thing, assuming that the assumptions that you may cold, steady, and we use it for a number of different reasons you can look at it from an investing standpoint. You can look at it from a savings standpoint. You can look at it even, and use the same basic idea to think about the value of paying off debt and these sorts of things.

[00:02:59] And it's an [00:03:00] accurate and good way of mathematically thinking. About money, the future value that doing something today gives you because the truth is we're really bad at picturing and understanding that if I invest $5,000 and it earns a certain amount of interest and I leave it alone for a long period of time, it will grow to be a much larger amount of money.

[00:03:28] And then of course there's all sorts of complicating factors like inflation and whether or not the interest rate that it earns goes up and down and various things like that can make it much more complicated. And because of that, a lot of times it's easier to just not think about it at all. The truth is that there's more to it even still, because there's also the emotional value of money.

[00:03:56] The way that money can give you a feeling of [00:04:00] freedom or flexibility or security or reduce stress, or increase your ability to do other things, both in the present and in the future is also wrapped up in all that. And often what happens is we're so focused on the present value of money, how we can use it today to make our life easier, to make our life better.

[00:04:24] How we can use it today to ease pain or increase pleasure that we don't focus at all on the future emotional value of money, how having money in the bank can actually serve. How having money invested can actually serve you in an emotional way. And we actually don't often pay much attention to that because it feels like it's something that happens so far in the future that it doesn't affect us today.

[00:04:52] And we ignore it emotionally. And because of that, we again put it off. So it's both complicated [00:05:00] and emotionally distant. And so we don't think about the future value of. Know, normally we think about money just in terms of purchasing power, just in terms of what we can get with it. It's also why a lot of times people will focus on even investing over things like actually having an emergency fund because the emergency fund isn't earning any money in at a time with high inflation, that emergency fund actually decreases in value over time.

[00:05:31] And because of that, we tend to look at that and go that's a waste of money and it could be. But if it's also giving you some emotional security and some feeling of flexibility and some ability to make decisions and take risks that you wouldn't otherwise be able to take, then perhaps that's actually worth it.

[00:05:52] Yes, there's a cost, but there's also a bit of. And that's the truth. You always have to think about this tension [00:06:00] between both the present cost and the present benefit and the future cost and the future benefit of money that always exists for every dollar you have. It's yet one more way. There's an opportunity cost with those dollars.

[00:06:15] Not only is there an opportunity cost in present to present. If I spend this money this way, that I can't spend that money, that way. But there's also a present to future opportunity costs. If I spend this money today or don't spend it today, what am I doing with it? That today affects my future. What can I do now?

[00:06:38] That can actually cause my future to be better. Or am I doing nothing? And causing that FX too. There's always these trade offs. There's always these tensions. That's one of the reasons that so often we end up ignoring and delaying and putting off [00:07:00] all of our decision-making when it comes to money, because why would we pay attention to it?

[00:07:05] It's so complicated. It's so emotionally difficult. It's so mathematically difficult. It really isn't, but it feels that. Instead, it really comes back to focusing in on your priorities, on your values on what's important to you today, and what's important to you in the future. And are you setting up your life today to get you those things in the future?

[00:07:32] Are you able to use the money you have today in a way that helps you both live today and prepares you to live well in the future? And here doesn't mean having a lot of money or doing any particular thing. Means are you setting it up where you feel like it's set up well in the way that you define your priorities and values?

[00:07:57] Not the way anyone else defines it. That's [00:08:00] why you have to work to really understand the value of money. Thanks for listening.

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