Why is money available now worth more than the same amount in the future?

Money available now is worth more than the same amount in the future primarily because of its potential earning capacity. This concept is rooted in the time value of money, which asserts that money has the ability to earn interest or generate returns when invested. For instance, if you invest $100 today at an annual interest rate, that amount will grow over time due to the interest accrued. Therefore, having money now means you can take advantage of investment opportunities that could yield more money over time, making it more valuable than the same amount in the future.

This principle highlights the importance of investment and the opportunity cost associated with delaying access to money. If you were to wait to receive that money in the future instead of investing or using it today, you would miss out on potential earnings and growth. This underlines the financial strategy of investing early to maximize wealth over time.