If you are unsure of where to start in applying this concept to your life, consider the following questions the next time you ask yourself “is this really worth it?”.
If you are asking yourself “is this really worth it?” that implies that you are already unsure if something is valuable to you. First ask yourself: What is it that I am questioning the value of? Something that is already in my life or something new?
If it is the “something new” then this is an excellent opportunity to simply explore opportunity cost. If it is “something that is already in your life” then this is a question of priorities. Either way you can still apply the idea of opportunity cost, you just have to approach it a little differently in each situation.
A) If you are questing adding something new to your life, ask yourself the following:
1) What is the actual value of this? Think not just in terms of money it saves you but also in terms of the amount of time it will free up, the amount of enjoyment you may get using it, and the amount of stress it might relieve.
2) What is the actual cost of this? Think not just in terms of the money it will cost but also in terms of the time it will take up, the amount of stress or frustration or future costs it might cause, and the amount of stress it might create.
3) What are some possible negative implications of this choice? Will it possibly cost you repair charges in the future? Will it possibly cause unnecessary stress in changing to a new system? What other possible negative effects might happen?
4) Does the actual value outweigh the actual cost? And does the actual value outweigh the actual cost enough to make it worth changing your routine and risk causing unforeseen negative consequences?
If the opportunity cost seems worthwhile to you then go for it. If you are still unsure, you might want to continue to the priorities questions before you move on.
B) If questing the actual value has brought you to a question of priorities, ask yourself the following:
1) What are the priorities that are in conflict? Family time vs. personal time? Saved money vs. convenience? Or is it something else?
2) Is there an alternate solution that would eliminate the conflict? Could you purchase a less expensive item or spend a little less time on something to balance the conflict, or is there another way you could eliminate the conflict?
3) Could one priority be used to support another? Personal well being is a prerequisite to being able to take care of others and convenience is a prerequisite to having more time to increase income. Could you reframe this problem in a way that eliminates the conflict?
4) If you can not find a way to balance the priorities, you may not be ready to make an opportunity cost decision. Take some time to review your priorities in general and when you feel you have a more focused sense of what is important to you then revisit the opportunity cost conflict.
All of these questions about your priorities are based on the idea of reframing. If you are interested in now reframing can visit my post on stress management techniques.
All in all, opportunity cost is about determining what is really important to you.
Have you ever weighed the true cost of a decision? What were some of the things you personally took into account to help you make the decision?