As an old saying goes, you miss 100 percent of the shots you don’t make…but you also do miss out on something whenever you make a shot. This stands true even if you managed to shoot. A shot in a different part of the court could have won you more points, but you risk missing the shot altogether. You could pass it to a capable teammate, but what if they miss?
This balance of risks, rewards, and losses applies to economics as it does to sports, finance, healthy habits, anything really. This is the reality of the trade-off. To be effective, you need to weigh major decisions based on this principle. Besides measuring what you stand to gain, you must consider your alternatives.
A Matter of Economic Choice
Opportunity cost refers to the trade-off between two decisions. These are the benefits you lose when you choose one option over another. What do you gain when we choose one thing over another. You might want to watch a new movie coming out, or you could pick up a new book. You might have enough money for one or the other, but rarely both. Consider your options with care:
- Are you a book person or a movie person? Are you both?
- Which between the book or the movie has garnered better reviews? Which one does the general public prefer? Do you trust them?
- Is the book or movie about something you like?
- Is the movie about the book? Do you want the book to spoil you? Will the movie be one of those adaptations that aren’t faithful to the book? Will it be bad because of it?
You might end up watching a lousy movie or read a terrible book. These considerations all factor in how much you stand to lose if you watch the movie or read the book. That’s time and money you’re not getting back. The same principle applies to all decisions.
Cost of Good Exercises
Opportunity cost is not always a monetary expense. Good exercises opportunity cost during a pandemic is the decision between continuing to work out at home or return to the gym. You might not think much of the cost of good exercises at a gym or at home. Suppose your membership is up for renewal and your local gym has reopened. You’ve been training at home or outdoors this whole time and now you are rethinking this to consider going back to the gym or not.
In cases like this, a cost-to-benefit analysis could be done to weigh in the benefits of both options. If the risks on one exceed its possible gains, it might not be worth changing the status quo. In your situation, consider going back to the gym if it makes sense from a risk perspective. Are there good exercises you used to do that you can no longer do now that you don’t the equipment? Will you be going as regularly? Is the location applying safety measures for physical distancing? Are these measures burdening your schedule? Does it accommodate your work from home or work from the office routine, however this may be? Can you still afford the membership fees? Will you continue to perform the good exercises you once did?
To sum it up, is buying the membership worth the costs of missing? Considering opportunity cost make better financial household choices that a couple that may have to consider to remain in a healthy relationship. Read this article from Regain. It will give you more information on premarital counselling to determine financial decisions that may impact your life together.
e-commerce store or cashed out.
Workout Regimes & Gear
The Gist of it
Reviewing your choices from an opportunity cost perspective is not only economically wise, but can also save you other headaches. Sometimes the choices seem clear but you must consider what else you are missing out on if you don’t opt for the other choices. How do you determine decisions before taking them?
P.S. If you enjoyed this post, sign up to my newsletter to get the latest advice, tips, and giveaways right into your inbox!