We have all heard the phrases “time is money” and “the most expensive thing is your time,” but exactly what makes time and money valuable, and why is time so expensive?

Finance is like another language. As you continue to live in this increasingly complex world, it is critical that you understand this language. It encompasses concepts that are very different from concepts in the social sciences, medicine, or law. The language of finance has unique terms and concepts that are based on mathematics and are critical for the learner to understand. Once understood, this financial language can help you develop, analyze, and monitor your personal financial goals and objectives so you can get your personal financial house in order.

When you have completed this section, you should be able to do the following:

1. Understand the importance of compound interest and time.
2. Understand the definition of the term investment.
3. Grasp basic financial terminology (the language of finance).
4. Solve problems related to present value (PV) and future value (FV).

I strongly recommend that you borrow or purchase a financial calculator to help you complete this section. Although you can do many of the calculations discussed in this section on a standard calculator, the calculations are much easier to do on a financial calculator. Calculators like the Texas Instruments (TI) Business Analyst II, TI 35 Solar, or Hewlett Packard 10BII can be purchased for under $35. The functions you will need for calculations are also available in many spreadsheet programs, such as Microsoft Excel. If you have a computer with Excel, you can use Learning Tool 12:  An Excel Based Financial Calculator, which is a spreadsheet-based financial calculator available on this website.