The time value of money is the principle that money now beats the same amount of money later. A dollar in hand can be invested, and by the time the later dollar arrives, the first one has grown. Flip it around and a dollar promised in the future is worth less than a dollar today, by exactly the growth it missed. This single idea underlies interest rates, loan payments, retirement math, and how to compare job offers.
The tool for the comparison is discounting. If you expect a 6% return, $10,000 arriving in five years is worth about $7,470 today, because $7,470 invested at 6% grows to $10,000 in five years. That $7,470 is the present value. Going the other direction, $10,000 today is worth about $13,380 in five years, its future value.
This is how to weigh a sign-on bonus against a raise, a lump sum against payments, or a stock grant that vests over four years against cash now. A $100,000 grant vesting evenly over four years is worth less than $100,000 today, roughly $89,000 at a 6% discount rate, before any change in the stock price.
The common mistake is comparing amounts that arrive at different times as if they were the same. $50,000 in five years and $50,000 today are different numbers. The second mistake is forgetting that inflation is part of why: money later also buys less.