In my recent post about the book Small Change I briefly touched on the important concept of opportunity costs. Today Tim Harford (he recommended the book) has another post about the topic:
Judge the value of what you have by what you had to give up to get it
I hope you reading this post and the linked post will be worth you giving up some time doing something else (e.g. wasting time on Facebook).
Money, money, money. Unless we return to bartering I believe it will stay with us and be an important part of our lives for a long time. And with it the question how to spend it wisely. Via Tim Harford I came across an interesting book about just that topic:
While it didn’t teach me as much new as I had hoped it reminded me of a few things and gave me a few things to think about, namely:
- The importance of seeing the money you’re spending, also called the pain of spending money. In our modern world more and more of our money is spent cashless, you don’t really see the money disappearing from your wallet, so you don’t feel the pain as much. While certainly convenient (and I use it all the time) it makes it much easier to lose sight of how much you’re spending (which at least partially is intended, as it gets you to spend more).
- Opportunity costs. If you spend £4 on a coffee/tea/hot chocolate, what are you not spending (or saving up to) it for? If you spend an hour on Facebook/Twitter/othersocialmedia, what are you not doing instead (e.g. writing a blog post like this)? What can you not buy/do by spending money or time or something? What is more important to you?
Neither of these were new to me, I had either read about them before elsewhere or learned about them during my education. But they were good reminders of things to think about more. In particular opportunity costs I think about much more now.
Other readers might learn other things or be reminded of other things from the book. I think it’s a good read, well worth the money (it might pay for itself if you learn something from it…).
I can’t remember how I came across him, but I first saw one of his videos a week or two ago. And was hooked. It seems his fame is spreading rapidly now, so you might want to check the Jonathan Pie YouTube Channel. His most famous video so far is probably this one (warning, some strong language if you have sensitive ears):