The mistake I made with my finances last year has repeated itself again this year, and if care is not taken it might repeat next year. Timing is indeed very important when dealing with money. It simply means to act in time because the value of money is timed.
I was able to purchase a plot of land three years ago, and started building on it. I was barely able to raise the building a little above the foundation level within the same year, with a plan to save up money to continue the building project the next year by December. The plan looks good, I figured by the end of the year I could save enough money to raise the building to roofing level, at least, so I thought.
With the savings plan in place, I never thought about doing anything on the building project until the end of year as planned. There were times when occasionally, a good amount of money would come into my hands and my wife would remind me of the building project, but I always told her I had a plan and I wanted to save up enough money to finish up the wall settings all at once. I had an estimation and a budget with a savings target I was working towards.
Then, at the end of the year, when I wanted to work on the building, all the money that I saved was not enough to complete half of the work that I had planned to do. The cost of cement was doubled before the end of that year. This same financial mistake repeated itself this year because I failed to learn from what happened the previous year.
One thing that I have learned from this experience is that money works differently with time or depending on when you have it. It's what economists call "The Time Value of Money", which simply means that the money you have today has more value than the same amount of money in the future. The amount is still the same, but what the money can do over time becomes smaller.
There are people who are still ignorant about the time value of money, and they believe that saving money for the future is the best way to get value for their labor. But they don't realize how many opportunities that money saved could have created if they were put into investment. If you have a hundred dollars today, you can decide to do so many things with the money. You save it, invest it, use it to learn a skill, or start a small business with it.
Your investment, skill learned, and your small business are the value of your hundred dollars today. These can be more valuable depending on how you handle them. But, that same hundred dollars today has already lost its value five years later if you decide to spend it then. By the time you decide to use your hundred dollars, prices of things would have gone up, and opportunities that the money could have made available to you will no longer be there.
When I look back at how I delayed working on my building project because I felt I didn't have enough money, I feel bad about myself. It wasn't about the amount, but about the time. Small money used at the right time often does more than big money used late.
This does not mean we should not save money, but we need to remember that inflation is there to deal with. Inflation is the silent killer of the value of money over time. Suddenly, everything became more expensive; food, rent, transportation, your children's school fees, all became more expensive than they were in the previous year. Meanwhile, the money you have sleeping under your mattress or in your savings account slowly loses its value during the time. Nobody stole from your money, but time took away its value. Your money can only now do less.
The time value of money teaches us to take action with our money in time, because money grows with time and also loses value with time. If you want to invest, do it now. If you have something valuable to your life you would like to spend your money on, do it now instead of waiting too long. Spending wisely today creates future value, because every financial decision is also a time decision.
The lesson from this post is simple: money waits for no one, it moves with time, either for you or against you. Whatever you have to do with money, whether investing, building something, or buying something valuable for your home, taking action in time beats doing it later. Even if it's small, do it now or you might need extra money to do it tomorrow.