WEBVTT - Consider the opportunity cost

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<v Speaker 1>Welcome to Before Breakfast, a production of I Heart Radio.

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<v Speaker 1>Good Morning, This is Laura. Welcome to the Before Breakfast podcast.

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<v Speaker 1>Today's tip is to consider the opportunity cost when you're

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<v Speaker 1>deciding whether to take on a new responsibility or accept

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<v Speaker 1>an invitation. Don't evaluate this option in isolation. Instead, consider

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<v Speaker 1>how the option compares to the next best opportunity that

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<v Speaker 1>you have to give up to say yes. In a

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<v Speaker 1>recent episode of the NPR show and podcast Planet Money,

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<v Speaker 1>economists were asked about the most useful ideas from economics.

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<v Speaker 1>Michigan State economist Lisa Cook named opportunity cost, and she's

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<v Speaker 1>got my vote on this one. As you may remember

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<v Speaker 1>from your econ one oh one days, opportunity cost is

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<v Speaker 1>the principle that the true cost of something is what

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<v Speaker 1>you have to give up in order to get it.

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<v Speaker 1>In other words, that new car you're considering doesn't just costs,

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<v Speaker 1>it's opportunity cost. Might be the kitchen renovation that you

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<v Speaker 1>don't have thirty dollars for if you buy the car,

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<v Speaker 1>or maybe you're in a job where in normal times

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<v Speaker 1>you can pick up extra shifts. The opportunity cost of

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<v Speaker 1>the car might be the extra day every other week

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<v Speaker 1>you'll need to work until the car is paid off.

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<v Speaker 1>Or you could invest the thirty dollars and in twenty years,

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<v Speaker 1>with compound interest, have enough saved to retire a year earlier.

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<v Speaker 1>You get the idea. As is often the case, money

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<v Speaker 1>and time turn out to be similar, our choices about

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<v Speaker 1>time turn out to have an opportunity cost too. When

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<v Speaker 1>you choose to do one thing, you are choosing not

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<v Speaker 1>to do something else, such as life. There are no freebies,

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<v Speaker 1>but you want to make sure that your choice is

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<v Speaker 1>both conscious and wise. The key realization here is that

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<v Speaker 1>when you choose to fill your time with something, the

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<v Speaker 1>alternative is not nothing. It's doing whatever else you could

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<v Speaker 1>have done in the same amount of time. So if

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<v Speaker 1>it takes you three hours to make the elaborate dessert

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<v Speaker 1>you saw on Pinterest, the opportunity cost might be reading

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<v Speaker 1>most of that new novel that you keep meaning to

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<v Speaker 1>pick up. Both could occupy the same block of leisure time,

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<v Speaker 1>or maybe your team has set up a recurring meeting

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<v Speaker 1>at nine am on Tuesdays. The opportunity cost might be

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<v Speaker 1>the other work people could have done at that time,

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<v Speaker 1>such as powering through big projects without interruption. When people's

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<v Speaker 1>minds tend to be fresh or in normal times meeting

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<v Speaker 1>clients for breakfast. So is the dessert or the recurring

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<v Speaker 1>meeting worth it. It's entirely possible that the answer is yes.

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<v Speaker 1>But the issue is that people often decide to take

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<v Speaker 1>on activities based on whether they're free, not whether these

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<v Speaker 1>activities are the best use of time. When someone asks

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<v Speaker 1>to meet on Tuesday at nine am, you look at

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<v Speaker 1>your calendar, see that it's open, and say yes. You

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<v Speaker 1>don't consider that maybe come Tuesday your biggest client will

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<v Speaker 1>be asking for a proposal by noon, or that at

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<v Speaker 1>am on Tuesday, your cousin will want to FaceTime because

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<v Speaker 1>after a month of quarantining with his significant other, they've

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<v Speaker 1>decided to get engaged and want to share the celebratory

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<v Speaker 1>news with you. Now, of course, neither of these new

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<v Speaker 1>developments may be likely, but you don't know that. When

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<v Speaker 1>we take on commitments or lukewarm about we may have

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<v Speaker 1>to turn down things we really want to do, or

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<v Speaker 1>throw our whole schedules into flux and create bad feelings

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<v Speaker 1>in order to make the good stuff happen. Better to

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<v Speaker 1>be more strategic when you say yes to something that's

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<v Speaker 1>only a five or a six on a ten point scale,

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<v Speaker 1>you crowd out space for the eights and nine. That's

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<v Speaker 1>the real opportunity cost. Don't assume your time will only

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<v Speaker 1>be filled with a zero. So today, as you're considering

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<v Speaker 1>taking things on, ask yourself what else you could do

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<v Speaker 1>with an equivalent quantity of time. Consider how you'd feel

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<v Speaker 1>if an opportunity to take on something that was an

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<v Speaker 1>eight or a nine wafted into your life, And consider

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<v Speaker 1>that you can often create opportunities for eights and nine

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<v Speaker 1>if you're smart and keep your eyes open. Hopefully this

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<v Speaker 1>will empower you to turn down the mediocre with more confidence.

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<v Speaker 1>In the meantime, this is Laura. Thanks for listening, and

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<v Speaker 1>here's to making the most of our time. Hey everybody,

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<v Speaker 1>I'd love to hear from you. You can send me

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<v Speaker 1>your tips, your questions, or anything else. Just connect with

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<v Speaker 1>me on Twitter, Facebook and Instagram at Before Breakfast pod

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<v Speaker 1>that's B the number four then breakfast p o D.

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<v Speaker 1>You can also shoot me an email at Before Breakfast

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<v Speaker 1>podcast at i heeart media dot com that Before Breakfast

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<v Speaker 1>is spelled out with all the letters. Thanks so much.

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<v Speaker 1>Should I look forward to staying in touch. Before Breakfast

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