Monday, November 17, 2008

keeping it all in perspective

my mom once told me, while i was complaining about the various little difficulties in my life, that if my problems could be solved with money, then i should consider myself very lucky. i've always been fortunate to be comfortable, financially, and i certainly don't want to minimize the challenges faced by those who struggle to meet their basic needs. but what my mom said really made me re-think how i spend money and why i try to save money.

because i am an economist by training, let me explain in economic terms: the opportunity cost of buying/doing something is what i give up in order to buy/do that thing. everything has an opportunity cost and, in most cases, it is not just a monetary cost. for example, you might think of the opportunity cost of getting take-out for dinner as just the $25 that could be spent on something else. but, in fact, the full opportunity cost would be less, because i "save" the time i would've spent cooking and cleaning and the marital strife caused by arguing with hubby about who makes dinner more and who should've made dinner today.

so, now, if something is really bothering me, and i can use money to resolve the issue, instead of assuming that i can't afford it, i think about what purchases i would have to forgo and whether i want those things more than i want this particular problem to go away. next time you have to make a decision about what to buy or what to do with your precious time, try taking a moment to reflect on what you are really giving up and what you are really gaining, and see if that gives you a little different perspective.

No comments:

Post a Comment