With the passage of time, all assets decrease in value and same is the case with money. But there is a lot difference between other assets and money. While other assets are used by themselves to achieve the end results, money is one aspect of any transaction. It can also be said that money is always one aspect of all transactions as the most peculiar attribute of money is its purchasing power. As the time passes, the purchasing power of money decreases. That means it would not be possible to purchase same quantity of any commodity at a future date which can be purchased today with a currency note of same denomination. To make up for this decrease, there can be two ways. First one is to decrease consumption as reduced quantity would be purchased with same amount of money and second one is to increase the amount of money to purchase same quantity of the commodity. This reduction in the purchasing power of money i. e. its value over the period of time is known as the time value of money. The value of money as on date is known as present value of money while the value of money on a future date is known as future value of money. To arrive at present value of a future sum, technique of discounting is used and while to reach at the future value of present sum, technique of compounding is used and for the same purpose a rate of required return is to be decided and used. Time value of money is the impact of time on the value of money. Basically, it is the change in purchasing power of money over a period of time. The concept of time value of money is utilized in making decisions regarding investment in different projects where multiple options for cash outlays and cash inflows are available. The concept of time value of money is also useful in selecting the highest paid investment option amongst all available options of investment. The concept is also useful in finding out the rate of return if present value and future value of a cash stream is available. Time value of money is a very useful concept in financial management.