Opportunity Costs

So, you’ve saved up for that new stereo or there’s a financing deal on the new car you’ve been eying. Ready to go shopping? Consider this first.

What most people don’t think about is something called an opportunity cost. When you buy something, you have to forgo something else. Yet, we rarely and rationally evaluate our options.

To get that new car, will you have to give up your Sunday brunches and this year’s vacation? You’ll be dancing up a sweat with your new sound system, but will that leave you short on saving for your kids school trip to Europe?

Taking even a short pause before you buy to consider all the other options you have when spending that pot of money will give you a greater perspective of your options. And, what you may need to give up or could get instead.

To discover more money traps and how to correct them, get your copy of Talk Money to Me: Save Well, Spend Some, and Feel Good About Your Money in stores December 17th and available at Amazon and Chapters for pre-order now.

As the Consumer Advocate for FP Canada, I know that financial literacy is paramount to your well-being. Equally important to your long-term success is working with a qualified professional. To find a CERTIFIED FINANCIAL PLANNER® professional in your area that will help guide you on all matters of money, check out this Find Your Planner tool.

FP Canada is a national professional body working in the public interest (formerly known as the Financial Planning Standards Council). FP Canada is dedicated to fostering better financial health for Canadians by certifying professional financial planners and leading the advancement of professional financial planning in Canada.

For more on financial planning and how to get started, watch What is a financial planner? and What is a financial plan?