Choices Always Come With Opportunity Costs

“The real cost of any purchase isn’t the actual dollar amount
but the opportunity cost,
what you could have done with that money
if you invested it elsewhere.”

— Charlie Munger

As she priced items as fast as she possibly could, all she could think about was everything else she could have been doing. She burst out in frustration, “I just have to get this done so that I can…”

She was talking to me – or to herself – reassuring herself this was the most important thing to be using her time doing at that moment.

Choices always come with opportunity costs.

When we say “yes” we are always saying “no” to something else.

Opportunity cost is one of many mental models that is useful to remember when making decisions.

You can use it when you purchase a line, merchandise products, hire people, or simply decide what you are going to do with your day.

For example, if you buy this line, what line are you not buying?
If you put these products in the best area of your store, what products are not getting prime placement?

What is your best choice to reach your goal?

Mental models can be super helpful. Part of the “trick” is to remember they exist – and to use them!

Another one I love to use is the Pareto Principle – or the 80/20 rule. If you want to know more mental models, search online. My favorite way is through Perplexity.ai. Google takes me longer. Right. Opportunity cost.

😍 And enjoy. It’s good to go new “places” every once in a while.
Might learn something random that helps you do what you do every day – better.

Here for you.

xoxo,
❤️ AmyFay

“What you need is a latticework of mental models in your head.
And, with that system, things gradually get to fit together in a way
that enhances cognition.”

— Charlie Munger