As we go through life, consider the opportunity cost associated with each choice we make. Opportunity cost is an economic term, and it represents the value of our next best option. And we love our options, feeling fortunate to have so many varieties of toothpaste to choose from.
Factoring opportunity costs into decisions large and small helps to make us aware of missed opportunities. When we pursue one thing, we forgo another. It’s the cost of the proverbial road not taken, one forgone opportunity in favor of another, and we can bring it into our decision making process.
Suppose we have a $100 gift card and are choosing between a new pair of shoes and a purse, each one costing a hundred bucks. If we choose the shoes, economists say it also costs us the purse. Our dilemma, then, is based on the difference between the perceived value of the two.
Sometimes it’s a clear cut decision. However, things can get a bit murky, like when our old purse strap broke but we have an upcoming event and no shoes to go with our dress. Or, when one of the items just sings to us, plucking at our heart strings and calling our name. Emotional decisions can be just as beneficial as practical ones.
If we wake up extra early to go for a run, it cost us the energy expended on the run plus the lost sleep. If we sleep in, it cost us the extra time spent in bed plus the lost exercise.
Simply put, every opportunity costs us the price of our selection plus the price of our rejection.
The point is not to focus on what we’re missing. The point is to be aware that something’s falling by the wayside, especially when we make the same choices over and over again. Imagine being aware that every time we choose to work late, consciously or subconsciously, we’re also choosing not to spend that time at home with the family, or somewhere else. That awareness helps us to see the bigger picture, and to realize that we always have a choice.
By expanding our awareness to include the opportunity cost, the blinders come off and we’re able to look at a broader range of options. That’s a double edge sword, because while limiting our options helps to keep us more narrowly focused, that focus also comes in handy. By knowing that any choice also costs us the opportunity of the next best option, or all the others, we can make more intentional decisions.
One way to help us in these dilemmas is to think in both the short and the long term. First, we need a set of guidelines geared towards our long term goals. Examine how we spend our resources of time, energy, and money to support our core values. Hint: How we spend those resources reveals those values. Our priorities guide us like true north on a compass.
Then, we need to consider what short term goals and desires can arise in the meantime because flexibility has wisdom, too. Saving for a vacation doesn’t rule out treating ourselves to an occasional latte along the way. It’s when our short and long term goals continually clash that weighing the opportunity cost can help tip the scale in our favor, however that may be.
When we wake up with a cold, sleep may be more important than a run. Working late may sometimes be more important than family time, and vice versa. What is most critical now? By learning to identify our most pressing needs, decisions about how to best meet them begin to make themselves.
When we negotiate with ourselves on all that we want, their true cost, and which ones we select and reject, we choose the opportunities of a lifetime, one at a time.