Personal Opportunity Costs and Financial Decisions

Like financial resources, your personal resources—your health, knowledge, skills, and time—require personal finance management. Do you eat a lot of junk food and avoid exercise? Do you get enough sleep each night? The decisions you make about your health now can have consequences as you get older.

In much the same way, the financial decisions you make today will affect your financial health in the future. For example, suppose that you and your friends have tickets to a sold-out concert this Thursday night. On Thursday afternoon your algebra teacher announces an important test for Friday. You must decide whether you will go to the concert, study for the test, or somehow do both. The opportunity cost of going to the concert might be getting a good grade on the test. You have to decide how to use your time to meet your needs, to achieve your goals, and to satisfy your values.