|Creator: Grant Cochra|
I played sports growing up. I played baseball, I attempted and failed at playing basketball, and I played soccer. I loved playing sports and I thought about trying to play soccer in high school, but my dad encouraged me to get a job instead. At age 15, I began my career as a clerk at a local 4-store dry cleaning chain.
I worked at this dry cleaner all through high school for 4 years. This job was a great experience because I earned some money, saved some money, and learned a lot of people skills (while handling angry customers that spilled spaghetti on their white shirts and blouses and were confused as to why there was still a stain). This job would also have a lasting impact on me because at the time, I loved Wendy’s.
You see, getting paid at $5.15/hour, I could buy 5 Wendy’s Jr. Bacon Cheeseburgers for every hour I worked. I never bought 5 burgers with an hour’s wage, but the important thing to note is that I could have. Thus, I began considering all of my purchases and expenses in terms of Wendy’s Jr. Bacon Cheeseburgers…
Is buying the latest Old Navy shirt worth 20 cheeseburgers? (I said no.)
Is going on that fishing trip with the guys next weekend worth 80 cheeseburgers? (I said yes.)
Is taking out Annie (name changed to protect the innocent) on Friday worth 40 cheeseburgers? (Absolutely not!)
Now fancy economists and college professors will tell you that I was considering opportunity cost. Opportunity cost put simply is the cost of what one gives up when making a decision. It’s easier to think about in terms of burgers if you ask me!
For example, when I was considering taking Annie out, I was on the fence. I figured dinner and a movie would cost me about $40. Well $40 is almost 40 cheeseburgers and when I thought about it that way, absolutely not!
As I’ve grown a little older and am making a little more than minimum wage, I now think of things in terms of nice meals at the Olive Garden, Georgia Bulldog tickets, or trips I could take with my wife as opposed to Wendy’s Jr. Bacon Cheeseburgers, but the principle remains the same. I encourage you to come up with your cheeseburger or some rubric of measurement that fits your personality whenever you need to make a financial decision. Think of purchases and expenses in terms of that rubric of measurement. Focus on the opportunity cost of what you are giving up based on your decision and you may find that your financial behavior changes more than you might think.