Decoding Opportunity Cost: The Hidden Price of Choices

Written by Javier TAN

Singapore, being a multicultural hub, attracts numerous international food franchises that set up shop, alongside locals venturing into their own businesses. In the midst of this vibrant scene, I find myself grappling with a simple yet crucial question every single day.

“What should I eat for lunch today? Chicken Rice or Salad Bowl?”

While choices may seem straightforward for some, they often involve decisions impacting our finances or health. Life presents a continual array of tough decisions, each shaping our journey. Whether selecting a school or an employer, a single choice moulds our future.

As the gravity of decisions increases, it becomes more important to carefully weigh the pros and cons before making the right choice. Sometimes, we also need to take into account the potential benefits and problems that might surface after.

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Opportunity Cost

/ˌɒpəˈtjuːnɪti kɒst/

the value of the best alternative forgone in order to pursue a particular course of action.

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Simply put, it's the cost of choosing one option over another, rooted in economic principles highlighting resource scarcity and the imperative of decision-making with limited resources.

Every choice entails a trade-off, where the benefits of the chosen option are weighed against those of the next best alternative. Recognizing and evaluating these trade-offs empowers individuals to make informed decisions, optimising their outcomes and resources.

However, my objective today is really about showing that opportunity cost comes not only in the form of profits and margins but also in the form of YOUR mental capacity.

The Cost of Double-Checking

Recently, I've taken on the roles of supervisor/manager, and as part of that role, usually it would involve achieving a certain objective or accomplishing a task. Often, I find myself w

ondering if the job is done well, or needs additional help. In line with ‘seeing is believing’, I often find myself looking for visible proof, be it checking my email or doing double work to make sure everything is smooth.

Over time, I began to that even one’s mindspace significantly influences one's approach to life. And that’s where the opportunity cost comes in. Do I spend the effort to double check or audit each and every part of the work? Or do I channel that mindspace to make sure I solve more pressing problems?

Trust and Delegation

Trust plays a pivotal role here. When I supervise someone, I trust that they will do their best to accomplish the task (provided I guide him well). This allows me to redirect my energy to coach clients, plan events, or edit a resume that will benefit someone - channelling my mindspace and energy to somewhere more worthwhile. Shifting from 15 minutes of micromanaging to 15 minutes of planning can make a significant impact on someone's life, and this is what I can't compromise as someone planning for the life and future of my clients.

This is why I have coaches and mentors in different aspects of my life, from exercise to dance and investments. Instead of pondering my next workout, I put my trust in my physical trainer. I know that he did the groundwork to make sure my exercise serves my purposes, and my role is just to do it properly.

Pass the Baton

Yet, the burning question remains: "How much does hiring a trainer cost? Can I plan the workouts myself?" Absolutely. Many achieve great results planning their workouts/diet, but it's about whether you have the mindspace. To me, instead of thinking about which push-up to do next, I rather think about what I want to do for my career, or what is my next focus in my dance.

The hidden opportunity cost is my mental capacity. Do I have the time or energy to plan workouts? By the time I plan, I'm mentally exhausted, thinking, "Maybe I'll do it tomorrow," or “Yeah it’s kinda late, let me sleep on it.”

That time and mindspace could be spent on what YOU want to do – whether it's quality time with loved ones, or just being there for some important moments in your child's growth.

Less is More

Sometimes, we feel the need to be more disciplined, stop procrastinating, and work harder, invest more, sacrifice sleep, and the list goes on.

Often we can only see the apparent pros and cons glaring in our faces. Perhaps what we truly need is to identify and assess the hidden opportunity costs, or the hidden iceberg that sinks the Titanic. What can we drop or delegate to someone else? 

When we have LESS to do, then maybe we can experience MORE.

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This content is for informational purposes only and does not constitute legal and financial advice on any subject matter. It should not be relied upon as financial advice.