Financial Literacy lesson no- 4

Money has a direct relation with the time period it is put in use. Hence the proverb, “Time is Money.”

— Vinita. V. Pal

Hello folks!

Here I am back again with yet another financial learning. I know this absence was quite long but this long absence was for a reason. Yes, the reason was the complexity of our new financial learning. By now you might have read the title of today’s lesson that we will be discussing, did you see the complexity in it? Do share about it in the comments below. I will be waiting for the same till then allow me to share my views on this. For me, Money has a direct relation with the given time period it is put in use. Hence the proverb, “Time is Money.” was like a jigsaw puzzle. It took me some time to sense the connection between money and time and also to understand in what way money is tied to time therefore this long absence. In those times of my absence I was educating myself on the line of this lesson and you know in this process I learned to connect dots and slowly and gradually started making sense. This learning helped me to join the pieces of my puzzle in the correct order and viola! after I finished joining the piece I saw the full picture showing me a clear view of the connection between money and time. Today I am here to share the same with you all because I feel confident about it and also want to share only the correct and authentic knowledge and not the unreliable one. So let’s get started:

The following are the elements that serve as a connection between time and money:

1. Value of money
2. Cash flow
3. Demand & Supply.

Let’s dig into each element one by one:

1. Value of Money tied to time: I won’t be technical over here because I want you all should get a sense of a shared relationship between time and the value of money. Let me start by giving example: Here is the news, an Ambassador car cost: Rs 16946, and Fiat1100D cost: Rs 15,946 also enjoy one night stay at the Taj hotel Mumbai for Rs- 6, will you believe it? of course not and at the present moment when the whole world economy is battling the recession and inflation this news seems almost sounds like salt on the wounds and might appear as a tissue of lies. This is not a lie my dear friends but a truth, a truth dated back of the year- 1972. Yes, it was in the year 1972 that these luxury cars were priced as mentioned above and now we all know their cost at the present date. Courtesy links. The question is very obvious now, what is that factor that brings about such a huge difference in the cost of the same automobiles and hospitality services? The answer is a very simple time. Time has brought about these huge differences. I believe by now you are able to see the ties between money and time. I know, this information is not new to you, you all must have had a sense of it what I tried doing here is to provide support to your previous knowledge with a lively and concrete instance so that you get into the habit of conscious realization of the value of money tied to time. And if you ask why it is important? To find out kindly check out my Financial literacy lesson no- 2.
2. Cash flow: Cash flow is the heart of the global economy. Why heart? Because it is the flow of cash in the economy that tells us the health of the global economic market. Cash flow is a record that registers and highlights the flow of cash toward income, expenses, assets, and liabilities in a given period of time. This record of the flow of cash in a given time period helps an individual or a company to plan their future investments and to check their financial health. Once you have these records prepared you will see the variation in the value of cash flowing over a period of time. Cash flow is a whole new and interesting topic of discussion and I don’t think I will do justice to this topic by clubbing it with our present lesson, therefore, I assure you I will definitely cover this topic in one of my blogs later till then this topic has to wait. If you are someone very enthusiastic about finance and want to know about the cash flow I have a book recommendation, do check this out, I am sure this will prove to be a great help to you. Just to give you all a gist of cash flow, it is a deciding factor of our financial health, and investment planning and also helps us in our financial planning.
3. Demand & Supply: If cash flow is the heart of our economy then the concept of demand and supply are the lungs, Agree? The advent of globalization was the gateway for the concept of demand and supply and with that many benefits and opportunities also flew in. Everything was functioning well and was good since the coming of globalization but in the year 2008 global economy collapsed due to the great recession. Recession in one its simplest sense means printing and the flow of excess cash flow this leads to a rise in price and demand drops this means supply is more than demand as a result of which the consumers’ purchasing power is curtailed. For eg: The purchasing power of a denomination will not be the same a year from now or so on. The situation is the same at present, we are again in recession, inflation rates are touching the top of the roof, and all this is the result of an imbalance in the demand and supply equation. Anything in excess is always harmful, you all must have heard about this universal truth. In the case of demand and supply the cases of excess demand or supply in a given period of time always gives rise to inflation and deflation situations that prove to be harmful to our economy. Constant checks on demand and supply in a given period of time can save us from the curtailment of our purchasing power.

Considering these elements it is not wrong to say, Money has a direct relation with the time period it is put in use. Hence the proverb, “Time is Money.”

If you found this lesson true and valid or if you have more knowledge concerning this lesson do share in the comment section below. Your sharing matters in our financial literacy endeavors.

Keep reading! Keep learning until next time.

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