# Calculating the Time Value of Money By:: [[Brian Heath]] 2024-02-05 One of the most valuable classes I took in college was titled "Engineering Economy." It focused on correctly calculating the value of money and assets over time. We learned how to calculate money's future and present value based on abstract concepts like discount rates, holding costs, depreciation, and interest rates. However, these abstract concepts have real meaning in the industrial age as one considers debt, income, and wealth. By the end of the class, we could make effective decisions about which scenario was more beneficial under various conditions. For example, when is it better to rent or buy a home? What assumptions must hold, and how might one mitigate risk given one's choice? This class has served me well, but how many people worldwide are exposed to such information? Very few. Some high schools are beginning to teach it, but it is still largely unknown beyond high interest rates being bad and low interest rates being good. Once one understands it, it is pretty simple. The problem is the number of industries relying on people not knowing how to do the math. Furthermore, even if one knows the math, one can be convinced to go against it if one is engaged or marketed to via emotional and cognitive bias tricks. Is this the right thing to do? Should people be free to make objectively bad choices that negatively hurt themselves and those around them? This is the first problem one must overcome when tackling systemic poverty-related issues. The second problem is what will happen systemically if everyone suddenly makes better economic decisions regarding wealth and debt. This is a challenging question unless one considers it imperative to do the right thing by not exploiting those who do not know. In this case, one ignores the consequences and does what one considers right. #### Related Items [[Money]] [[Economics]] [[Value]] [[Decision-making]] [[Ethics]] [[Society]] [[Poverty]] [[Systems Thinking]]