Saving money isn’t an easy task! It’s human nature to go out and spend money, we always want the newest and greatest things. Thing of the hours long lines that accumulate everytime a new version of the iPhone comes out, or the stampeding masses on Black Friday….people have literally died getting caught in that madness! Consumption is second nature, and there is a price to pay for this consumption. Opportunity cost is an accounting term that often applies to real life situations, in fact it should be a mandatory term that everyone learns about. The basic concept is that however much we spend on an item, there was an opportunity lost on whatever else we could’ve used that money for. I may purchase a new television set that costs $3,000, and while I may enjoy hours of entertainment from it, that $3,000 could compound to $5,000 in my retirement account that I could use later in life. Perhaps that extends my working life by a few weeks, or few months. Basically, I’m trying to let you know that there is another cost to everything you buy.
So, what am I drilling opportunity cost into your heads? I’m trying to let you know that sometimes our innate want to keep up with the Jones’s can be our downfall. Most of us work hard for our money, and no doubt we should be able to do with it as we please, but we also need to stop and consider the opportunity cost of how we are currently using those funds. A new mansion, a new sports car, having a dozen children can all be great things, but it could also mean that we are forced to endure a stressful job for 10 years longer than we otherwise would have. Sometimes peace of mind and a reduced stress lifestyle don’t come with a price tag.
I won’t lie to you and say that I don’t enjoy the finer things in life. However, I also know that we are only on this Earth for so long, and the time with out loved ones is not infinite, though at times it seems like it is. Make sure you use your money wisely, work to live, and not so much the other way around.