Lifehacks







Understand opportunity costs

Thursday, 20 October 2005

A critical idea to understand for a successful life is that of opportunity costs. It is one of the key concepts of economics, but is very easy to appreciate for anyone.

The idea is that resources are limited - particularly time and money. You only have so much time and money to spend, in other words. Neither is unlimited.

So if you have $20 and you decide to spend it on a haircut - that's $20 that you can't spend on a book. The book is the opportunity cost of the haircut.

Another example is deciding to spend Friday night at a party instead of studying for an exam. The study time is the opportunity cost of the party.

It is the true cost of buying something or spending your resources. It is what you could have had but have given up in order to have something else.

Why is this important?

Everything you do has an opportunity cost. From going for a walk rather than working, to studying literature instead of medicine, to buying a new car instead of saving for your retirement. How you use the scarce resources provided to you - particularly your time - is a huge determinant of how successul you are in life.

How much of what you want you actually achieve is largely a function of how you use your resources. Because of this, you should get into the habit of weighing up the opportunity cost of amost everything you do.

Is what you are using your limited time for really the best thing you could be? Is what you are spending your money on giving you the maximum benefit it could? Is using your time watching television while your relationship with your spouse withers really worth it?

Like everyone else on this planet, your resources are limited. Make sure you're using them to derive maximum benefit for yourself.




Self help & motivationTap into your subconscious
When I was at school, I used to get in trouble for “daydreaming”. It was seen as an unproductive activity, interrupting my sharper “conscious” learning. It was something I had little control over. My mind just seemed to want to drift off sometimes.
Self help & motivationKnow when to be cold and calculating
When I was in my twenties, I got quite interested in going to pool halls with my friends. Generally, in such places there'd be more people wanting to play pool than there were tables to accommodate them. Under such circumstances, it often became necessary to play strangers for control of a table.
Self help & motivationLearn the gentle art of paying compliments
Often in life, it's the areas which others ignore that hold the best prospects. When everyone around you is using the same strategy for getting ahead, you can often find an easier and better method by looking elsewhere.
Self help & motivationDo lots of small favors for people
One of the most powerful unspoken rules in human behavior is that of reciprocation. In other words, if I do you a favor, I expect you to do one for me in return.
Self help & motivationThe best type of business to be in
In the 1967 film, The Graduate, an experienced and successful Mr McGuire gives the main character Benjamin a piece of advice on what type of business to pursue - "Plastics". This sums up many people's attitude to business.
Self help & motivationDiscover ways to make people laugh
One of the best skills you can learn to improve your relations with others is the ability to make people laugh. Everybody loves someone who can make them giggle. Being able to do so will help your career, your friendships and your business dealings.
Self help & motivationMost things won't be as easy as you think
You know what really upsets me? When things don't turn out the way my optimistic side expects them to. When the girl I thought liked me just wants to be friends, when the job I thought I had in the bag goes to someone else, and when that cool party I was planning flops.
Self help & motivationConcentrate on the future
We all have miserable events happen to us in life. Believe me, I’ve had my share too.
Self help & motivationWork around reality, don't fight it
What makes me so angry that I want to scream? Almost always the event takes a similar form. It's when reality doesn't behave as I expect it to.
Self help & motivationA good anger management trick
We all get angry sometimes and “lose it”. Good things rarely come from such episodes. Wouldn’t it be better if we could deal with the world more rationally, and keep negative emotions out of it all? Here’s a good trick for doing just that.

New articles are being added all the time, so make sure you bookmark Paul's Tips and come back.




Newsletter
Enter your email to be informed whenever a new article is added.



auch auf Deutsch verfügbar
Search
Web Paulstips.com

Rss Feed

Subscribe in NewsGator Online

Add to Google

Add to My AOL

Subscribe in Bloglines





© PRK Holdings