You’ve probably heard the term Opportunity Cost once or twice in your lifetime (flashbacks to Economics 101), but how does that have anything to do with you today? The truth is, you are implementing the concept of Opportunity Costs or Trade Offs, every second of every day. You are doing it right now and I bet you didn’t even know it!
Yup, that’s right! By taking the opportunity to read this amazing blog article (ahem) you have made the decision (whether consciously or subconsciously) to forgo some other benefit or opportunity. Investopedia defines Opportunity Cost as “the benefits an individual, investor or business misses out on when choosing one alternative over another.” So maybe you’re missing out on folding some clothes, or putting away the dishes, or even writing that blog article of your own, or MAYBE you’re missing out on 5 extra minutes of quality time with your kids (insert mom guilt here). BUT DON’T LEAVE JUST YET! You’ve made the choice. Let’s follow through.
For Every Trade Off There is a Consequence
We are faced with trade off decisions from the second we wake up every morning, until the second we close our eyes each night, and with each trade off decision we make, we face the consequences of our choices.
- Do we snooze for 15 extra minutes or wash our hair today?
- Do we eat that healthy lunch or go for the high-fried-food-in-a-bag?
- Do we choose 30 minutes of active play with our kids or 30 minutes of rabbit hole screen time on our phones?
You get the idea. There is a cost and a benefit to each decision we make, and it is far less about judging our own choices, but more about being consciously aware of them, and knowing why we are choosing one opportunity over the other.
How You Spend Your Resources Says A Lot About What You Value
In terms of Opportunity Costs, we look at all of the resources you spend (your time, your money and your energy) as a direct reflection of what you truly value at that moment in time, and how you perceive it will affect your future.
- Cocktails with the girls or a late night business hash session?
- $90 pair of boots or retirement savings?
- Work, work, work or quality time with your spouse?
- Daily fast-food-pick-up or healthier meal planning?
- Pinterest rabbit hole or play time with the kids?
- DVR binge watching or home organization?
- Business seed fund or relaxing vacation getaway?
These are all trade offs that paint a very clear picture of what you value. Don’t be misguided here though, sometimes fast-food-pick-up for time savings is more important that keto-whatever-ing, and sometimes you deserve a much needed mental break over fattening your business bank account. What you value is important, and how you spend your resources will tell you that.
You Are the Controller of Your Resources
“Why the heck did I sign up for this?”
“Why did I agree to do this?”
“What the heck was I thinking to say yes to this?
You know these questions. You’ve heard these questions. You’ve probably said them to yourself a time or two (or if you’re anything like me, a few thousand times). Whatever the case, the theme is collective… YOU made the decision. YOU are the controller of where you decide to spend your time, money and energy. Being consciously aware of your decisions is extremely important, as you are the controller these resources.
Learning to Say No
Let’s practice this together. Say “NO.” See? You did it! Yup, it’s that simple! Ok, maybe it’s not that simple, but realistically, it is actually a lot easier than we make it out to be. Trust me. As a decades long “yes man” (or “yes woman,” I should say), I know how hard it can be to say no to things. But when you truly train your brain to become consciously aware of the opportunity cost of every decision you make, saying “no” becomes far easier.
3 Easy Steps to Saying No
- KNOW YOUR VALUES
You need to know your values in order to make sure the decisions you make are in line with them.
- KNOW WHAT THE OPPORTUNITY COSTS ARE
You need to know what trade offs you are making or what you are missing out on or what you are giving up to spend those resources
- ASK YOURSELF IF IT IS IN LINE WITH YOUR VALUES
If it’s not, curb it. If it is, go for it!
As mentioned before, don’t be misguided here again. Saying yes sometimes is ok too, it’s all about knowing the costs and benefits of your decisions. Sometimes you need a break, even if it’s at a cost of writing one more blog article (#notetoself). Sometimes it’s OK to take that vacation, even if the cost is your hard earned dollars that you could save and invest elsewhere. Sometimes it is ok to not know what the heck is ok, and that is OK! The point is, it is simply important to be consciously aware of your decisions.
There is No Such Thing as Free
Remember, there is no such thing as a free! So the next time you get offered that free lunch, or that free seminar, think about it. What are the opportunity costs? What are you giving up to attend that “free” seminar? Is that “free” lunch in line with your values? Weigh your opportunity costs and make a decision. Say NO if the costs outweigh the benefits for you, and rest easy knowing you made a good decision, even if it’s not everyone’s favorite.