What the heck is that? Well, opportunity cost is the time spent that could’ve been used for something differently. This principle is essential for good financial management, as well as time-use decisions.
A favorite saying of economists (good ones) is this: “TANSTAAFL!” This probably tells you absolutely nothing, except that it’s an acronym. Well, TANSTAAFL stands for “There Ain’t No Such Thing As A Free Lunch!” Even if you don’t have to pay for it, think about the opportunity cost your parents had to do to prepare you that delicious meal.
This principle is applied many times, when, for example, you ask “should I hire somebody or do it myself?” What you’re really asking is what’s worth more to me, money, or time? if you decided to hire somebody, you’re time is more important. If you do it yourself, than money is more important. Either choice is fine, but you have to consider the opposite before deciding if it’s worth it or not.
Then there are questions that seem to not have any opportunity cost, but really do. For example, starting a vegetable garden might seem like a very attractive option, because you know what goes on in your garden and what you’re eating, you have to consider what you could’ve done with the time you spend tending to the plants.
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