Opportunity Cost
When having two choices-the alternate is your opportunity cost. This is the third and final part of my Financial Series for the newsletter. Let’s say you have $1 and you want a snack – 1 apple is $1 and 2 oranges are $1. If you choose the apple, your opportunity cost was 2 oranges.
We use two main units of measure when making opportunity cost decisions: Time and Money! Make a $5,000 purchase in your 20s or invest that money for 30 years? That $5,000 would be worth over $100,000 30 years later! If you have 30 minutes before you go to bed, do you scroll social media or go exercise? In both instances, at the moment you do not see the long-term impact of your decision.
Have you ever felt buyer’s remorse for a purchase? That is an opportunity cost! You start to think about all the other things you could have done with that money. Everyone has that relative that says “wish I had bought Microsoft stock in the 80s, you know how much that would be worth now?” Instead, they bought something they probably do not even remember to this day.
Same thing with time; binge-watching a season of a show sounds good when you start, however, more times than not, when you are done your mental health has actually decreased because all of the things you could have done with that time (that would improve your quality of life/mental health) were not completed.
To make the best choices with your money or your time and to minimize your opportunity costs you must use DISCIPLINE!!! I hope you have learned something from this 3 part series.
Bob & Lisa