I love this time of year! The leaves are changing color. There is that certain smell of fall in the air. The temperatures are crisp and refreshing in the morning and pleasant in the afternoons. Alas, this is only a door way. For many, fall is just preparation time for the winter. We finish up the summer tasks, put the patio furniture away, winterize everything, and (if your garage is like mine) we make one major occupancy change. The lawn mower gets buried in storage while the snow blower gets moved to the easy-access parking spot right by the garage door.
Many people in our part of the country make the same change every fall. It’s just a matter of preparation for the inevitable. There will be those early mornings when we roll out extra early just to make sure we can get out of the driveway and get to work after the snow plows have gone by. But to be honest with you, I began to change my habits last winter. Sure, the snow blower was still kept by the garage door. In most cases, however, I didn’t use it. The snow got cleaned from all concrete surfaces, but I did with a combination of scoop- and pusher-shovels.
Many people may think me crazy (especially living on a corner lot with two lengths of sidewalk), but it comes down to one important concept – ‘opportunity cost’. “What’s that?” you ask? Opportunity cost is the value you lose when you make one mutually exclusive choice over another.
“Oooooohhhh, yeeeeaaaaah… That makes it soooo much clearer.”
So let’s apply that. When I was starting up the snow blower to take care of the snow, it really was less work. It was faster (although not usually by much). But it also cost me the gas to run the blower. In this case, opportunity cost is what I lost by not shoveling. The cost of the gasoline for the blower is included in this. But for me, the bigger issue was the exercise I missed by not shoveling. I don’t belong to a gym so winter can be a fairly sedentary time for me. Shoveling became an opportunity for me to improve my health. Furthermore, when I shoveled, my kids would sometimes come out to help (often devolving into play time). So family time with my kids was another opportunity cost of using the snow blower. For a third example, I would bundle up tight when running the blower. When shoveling I would tend to shed a layer or two due to the exertion. Keeping warmer was another opportunity cost of using the blower.
I understand if you don’t like winter and want to spend as little time as possible out there. Or perhaps you have other issues that don’t allow you to shovel. That’s ok. My point isn’t to convert you all to a shoveling crew. My point is to encourage you to think critically about the choices we make.
Rarely do we make a decision for which there was no other option. We do, however, need to be aware of the options and the opportunity costs that come along with them. Last night I met a gentleman who refused to put his money in a bank due to fees and penalties. As a result (opportunity cost), he was struggling and looking for ways to help him better manage and save his money. It was too easy to spend it when it was all cash in hand.
As another financial example, we got a new puppy a few months ago. There are the benefits of companionship and entertainment of having a puppy. But given the costs of a new puppy, our opportunity cost was over $500 in the first few months that we didn’t use to pay down other debt.
My point here is not to say what is right or wrong for you. I don’t know that, in making financial decisions, any one else can really make those decisions for you. My point for this post is to encourage you to think critically before making the decisions you do. Consider the value of the results of each decision. Consider the consequences of those decisions and their impact on your larger goals for life (you have been intentional about writing those down, right?).
Avoid making snap decisions. Take a step back. Take a deep breath (your brain needs oxygen to work efficiently). Imagine both futures before you follow the path of one over the other. What will you miss out on or lose if you choose each one over the other? What will the opportunity cost of each choice be?
What are the opportunity costs of taking a trip compared to paying down existing debt? What are the opportunity costs of buying a house compared to buying a brand new car? What are the opportunity costs of buying that new puppy compared to taking a class at the local college?
In all honesty, I don’t know what those costs would be for you. Only you can determine that. So please, avoid the quick impulse decision. Think critically about the bigger picture and where you want to go in life. Think about what is really important for you. Take time to weigh the opportunity costs of each option.
I’m not going to contradict myself by telling you that the Center for Financial Resources counselors can lay those costs out for you. But they can be a sounding board to help you organize your thoughts. If you would like some help with setting your financial goals or setting a budget to reach those goals, our counselors can help. Should you so choose, they can even help you budget for a shiny new shovel to use this winter.
written by Breck Miller
images courtesy FreeDigitalPhotos.net