The HIDDEN COSTS of Every Decision You Make!
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- čas přidán 27. 08. 2020
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Every decision you make comes with a price, which economists call the "opportunity cost." Understanding it can help you become a better CFO of your life.
Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.
sources:
en.wikibooks.org/wiki/Microec...
www.thebalance.com/what-is-op...
examples.yourdictionary.com/o...
www.wsj.com/articles/pepsi-co...
Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Andrew Matthews
Executive Producer: Amanda Fox
Produced by: Katie Graham
Edited & Animated by: Andrew Matthews
Images by: Shutterstock
Music by: APM
“Life can only be understood backwards; but it must be lived forwards.”
― Søren Kierkegaard
Tenet?
Who the heckkk is living life forward?
@@manujohn99 Everyone in this spacetime continuum.
@@LG123ABC spacetime continuum is the past repeating itself.............stumphead
💯
This has plagued me with stress with even the most minor decisions, but the last statement is really encouraging. Thanks guys!
Stan same here
Exactly. I felt the same.
yokanand thirupathi p
There is supposedly research to show that we have more options than ever, creating infinite imagined opportunity cost and lots of people feeling unhappy or regretful! It's really important to remember the one or two things which are most important to us and not worry too much about choices relating to other things. (Especially if we've already made the choice!!(
Thats why some or many are indecisive about stuff anytime cause u try weight the pros and cons of what u do or buy anytime. u might think it a good idea , but then we give ourself time to think and decide how bad u wanna do it or wanna buy for any reason. and what we deicde does not always go as planned at time or later cause almost always something gets in the way of what we decide anytime.
Making no choice is still a choice.
My dad told me "If you don't make a decision, someone else will make it for you!"
@@Donnah1979 True, and what they decide u may not like lol.
Def agree!!
@@cable30 Yeah that's the point
How much did it cost you though.
The cost of going to college vs starting your career is probably the most overlooked opportunity cost in the modern world. Great video!
Right, but then again what kind of career are you starting without a college degree? Which employer is more welling to employ a worker who doesn't have a college degree than one who does?? You can work anything through your college life, sometimes even get internships that do qualify as job experience. You can work as a clerk at a supermarket but still say that that job has taught you patience, handling people better, and handling your time better since you were juggling work with school.
@@tasneemahmed5821 I get what you're saying. But many people who got a college degree aren't actually educated in the areas that affect them the most like their finances. And many people honestly don't even get paid that much to really justify the cost of their education. There are tons of other opportunities out there that I am seeing now as a Graduate Student that I wished I had capitalized on sooner. And tbh in my experience in the engineering field, many jobs that higher college graduates spend the next few months teaching them on the job anyway and have heard similar things from my friends in different fields starting their careers. So based on my personal experience, I have been left to wonder what was the point in my first 4 years in my college education.
I felt like my college education was a waste of money... But i bet i would feel different if i took the other road 😆
@@mycathasawhitetoe that college degree conveys certain information that an employer is interested in, even though they'll provide a degree of training.
That degree tells thern that you have above average intelligence, a strong work ethic, and the ability to set a long-term goal and meet it.
There's also probably things you learned in academia that you use professionally, but have simply become second nature, like having an intuitive sense of weights and measures.
@@tasneemahmed5821 I dont have a degree. I do however work for the US government as a mechanic and make $50k per year in salary. I make around another $20k in benefits. I went to school for 1.5 semesters. I have $9k in student loans. The supplemental education I gained in school on top of my previous experience as an independent mechanic was instrumental to my success. There are scenarios that it works without a degree.
I had a boss that didn't understand opportunity costs. He had highly paid programmers painting the office and moving furniture when he could have hired cheaper labor to do that. He figured it was free since they were salaried.
would only be free if they were working unpaid overtime in order to do it
@@itisdevonly True, but they weren't. It was during regular business hours. Though they also worked extra hours here and there, so the boss got his worth out of everyone.
Also had workers he knew and so less hassles to deal with anytime instead of hiring outside help which may have cost more if any hassles at time.
Well if the office was getting painted, the programmers wouldn't have had a place to work, so your boss would still have to pay them while they were at home, might as well keep them working by painting it themselves instead of pay extra people to do the job as well
sounds like you were a reluctant slave
That opportunity cost got VIc singing "I'M NOT OKAYYYYYYYYYYY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"
I’m so glad you guys covered this. I’ve tried to explain opportunity cost to friends who only think about the accounting costs, and you guys really nail your examples on the head
The opportunity cost of thinking of opportunity cost: living life.
Opportunity cost: The time you spent thinking on other opportunity costs can be used for something more productive
"If Angela goes to college, she may make more money down the road, but she will miss out on 4 years of salary and job experience that she would have gotten from a full-time job."
Me, a full-time employee who just started full-time college: 🙃
I'm also surprised they didn't mention student loans!
My 13 year-old daughter has struggled with opportunity cost her entire life. I love how this video treats the subject, especially the warning against overthinking the choices. What I've told her is that once she's made up her mind, she should do all she can do to stop thinking about the alternative, like it never existed in the first place. This isn't universal advice, but for someone who frets like my daughter does and who often finds it impossible to enjoy the choice she went with because of the loss of the other option, I think it's exactly the solution to strive for.
Her: "You can see how opportunity cost, can send you down a rabbit hole of infinite possibilities..."
Me: "Then why did you tell me about it?" 😭😭
Why did u click the video??
Opportunity cost is the most important concept in economics, especially when combined with the concept of marginal cost and marginal benefit.
Them: "You and your wallet can't be in two places at the same time"
Well, tell that to all these online subscription services popping up all over the place.
i haven't even watched this yet... but i know i'll be using it in my classroom
at what opportunity cost? :)
The opportunity cost of showing my class... Might be my job haha
This is a good topic or what if kinda videos that some or many may never see and learn from anytime.
5:33 also the work to sell a bottle of wine for just $100 when you could just enjoy it.
"Have you got something better to do?"
OMG what an incredible way to start an episode about opportunity cost!
Their child is going to own wallstreet at this rate, I manifest it♥️
Honestly I never thought of Opportunity Cost or knew the term. Thanks for shedding some light on it for me :)
That opening pun made genuinely laugh out loud. Good to see Phil's dad jokes are coming in! 😂
As someone who came up through high school in the big emo and goth explosion circa 2004, I also laughed a little too hard at that MCR reunion. Me in 2020 loves blazers and penny loafers. Me in 2004 loved all black and metal spikes. Ah maturity.
LMAO
I didn’t catch the pun :(
@@clairedubiel6226 Phil said “or do you have something better to do?” Which is the whole idea behind opportunity costs
I can still remember my Economics teacher from high school saying "Opportunity Cost is the opportunity lost". Great way to remember what it means.
awesome! thanks for sharing that it'll be easy to remember now
As an economist, I really appreciate you guys talking about opportunity cost 🙌🏼
This is an episode that is actually extremely important to know about!
We're learning about this is my econ class 😂 the timing of this video wow
Lol same
1:52: Ah, you forgot the simple solution: "Schrodinger's 'Stache"
This video is a good one. I see that the quarantine haved afected the quality of the channel but this one really bring back the old Two Cents
I've been juggling between getting my PhD or going to work right after undergrad. I think getting the extra education would have a tremendous benefit in my field.
This covid virus has caused us all a huge opportunity cost! I'm sure we all wish this had never happened even those getting paid at home!
COVID-19 has actually improved my life and I wish I could say the same for most people. I used to spend around $300/month commuting to San Francisco for work, but since I work from home now with the same hours and pay, I now save that money by not commuting, I get to wake up 2 hours later which allows me to spend more time playing video games at night, and I use the time I would have spent by commuting back home by going mountain biking or road cycling.
Back in February and March, I took advantage of the empty roads and parking lots to learn how to ride my motorcycle better without worrying about cars.
But again, I am spending much more time and money on my hobbies than I am saving by not commuting.
Events don't cause opportunity costs. Opportunity cost is foregoing one thing in the pursuit of another. You control the outcome of the choice.
So covid cant cost you to have an opportunity cost. The opportunity cost could be:
After being furloughed, you forego the unemployment benefits because you decided to find another job. Giving up unemployment short term in order have a job long term.
Nope, not me 😜
@@richiea7969 I don't know if it's only my state, but the unemployment pay was ridiculously good during the last 5 months.
My girlfriend was making about 4 times what she made before the pandemic hit. That's on top of a 11k check.
My friend made $1,348.46 a week... *a week* and she also got a check for over $10,000.
I almost quit my job to sign up for unemployment.
Great example of the two roads at the beginning. I use that in my econ classes as well. Enjoyed watching!
"Opportunity Costs" is the single most important thing I learned in economics. It reverberates across all decisions I make, and effects the outcome of everything. Thank you for bringing this up!! Excellent video, as always.
I love the sly, "Why, got something better to do?".
What a funny and low key lead in!
It's amazing to see such detailed representations of opportunity cost in discussion! I'd love to see more videos on this :)
To add:
5:19 That is called "psychic benefit"
The subtleties in this video was amazing!!! From the joke at the beginning to the inclusion of a gay couple. I love this show, educational, fun, and inclusive.
Great timing! I started an economics course this week!
I used to think about this a ton, but I started investing more and it helped me get over the anxiety of it all. Opportunity cost when you sleep vs. Side hustle.
yes, sleep is a total waste
These are the main reasons why decision making is extremely hard. There's a lot to consider (money, time, experience, stress level, etc) and then when you finally make up your mind, you'd think you should've gone the other way.. :(
I NEEDED THIS VIDEO!!!! I knew what opportunity cost was roughly, enough for me to drop out of college, but I didn't know any vocabulary or details. Thank you!!!!
I have always known about opportunity costs, but this explaination was something else. The dilemma of having to choose between financial benefits and costs against those experiences that cannot be put up in a balance sheet is real. But, I think, most times, it's always good to just go ahead with the experience. You always end up learning something new whether or not your decision was correct.
Thank you for the warning at the end. This sort of thinking has kept me up at night for years and don't want others going through that. Sometimes, just living life is good enough without stressing over every decision.
This is one of the most useful concepts I learned in college, and it also makes chasing a major very difficult.
Def agree that each decision we make can reflect our budgeting. I really love how you explain everything. Can you please make a video or information regarding creating business vs nonprofit. Thank you!
It's always funny to look at the person not speaking when they're both on screen
Great programming, as always!
You have no idea how much I needed to hear that bit at the end about an ocean of choices. That's me in a nutshell, constant second-guessing.
I love how honest and objective your financial advices are. Thanks!
Answer: my favourite economic concept!
Great summary of an economic concept that I took in Economics. Watching you was an opportunity , now was this a fork in my road for
knowledge?
I don't buy the wine example, because that's a windfall. There has to be some consideration of that.
Not really. If you don't manage a windfall responsibly, that just means you will quickly be back to where you started, rather than having advanced your position in life. Just because you happened to stumble upon something worth money doesn't mean that money couldn't be put to better use. Every single lottery winner receives their money through a windfall, but that doesn't mean anything when it comes to how best to manage their finances, and failure to do so is why so many end up broke.
The thing I don't like about the example is that there would be a non-financial cost to sell the wine. Finding a wine buyer and getting them to pay a good price for a singular bottle of wine from someone who walked in off the street is not going to be easy. I'm not sure the effort to liquidate the bottle of wine would have been worth $100.
Doesn't matter. It might not have cost you anything to acquire the wine but drinking it is choosing to forgo whatever you could have earned by selling it.
@@BTrain-is8ch Yeah, but I just have trouble labeling that a "cost". If I were on Cash Cab, for example, I would always, always, always go for the double-or-nothing, because I'm betting with house money.
I found that one way to stop spending excessive amount of time browsing social media is to keep reminding yourself of the more useful and fun activities your could do instead.
Being a sought after caterer in New York City threw me into this quandary. Skilled caterers with a few good companies can work at will. I could go 3 weeks without a day off if I wanted. Often I worked 7 days a week with 2 doubles that week. I knew some people who would work a few weeks worth of doubles and would consider a single 5-hour shift a day off. Someone would ask me if I wanted to go to a movie with them. I'd think, if I gave up my work that day, that movie would cost me $120.
Then, one day, we were talking about one of the older catering captains (late 40s which was old at the time). Someone claimed he had a few 100 thousand dollars stuffed under his mattress. He rarely took days off. Never went anywhere or did anything. He had never been on a vacation. So I decided, sure I want to make money, but I couldn't think about the movie costing me $120. Otherwise I'd never go anywhere or do anything with my friends.
You guys deserve more subs. You make videos witch actually helps people
4:30 Papa Musk already thought about that opportunity cost
That's why he building more gigafactories to specialize
That Texas factory will focus on Tesla Semi and Cybertruck
Hmm Conservative politicians will have you believe that those factories were made because of California’s Democratic Government. Maybe Elon was playing 4D chess and trying to strong arm the Californian companies to give him an even better deal for his factories there? No, must be politics. (Sarcasm).
“You and your wallet can’t be at 2 places at the same time” - every married couple would disagree 😂
Hello Two Cents,
I love your show and as someone recently graduated from college it has been really helpful from the start.
I just had a thing which I notice often when watching the videos so I would like to share that, hopefully it will help people like me who watch the channel. I know it's a PBS show and hence a main focus would be america, but I'm sure a lot of people who watch this channel (me included) are not from there and a lot of information in this channel does not apply outside US
It would be great if you could increase more general topic videos which can be applicable more globally
I hope this comment reaches you guys and thank you for the nice videos
I just came across this concept in my economics course haha wow. Love your take on it
Thank you so much the amazing explanation!
I heard that The Road Not Taken was basically the poet saying he realized both paths were virtually the same, but that in the future he'll be saying how he took the better one, even though he can't tell and was actually full of regret/"what ifs" for the other path.
Which is oddly (or perhaps, by design) appropriate for this video!
www.theparisreview.org/blog/2015/09/11/the-most-misread-poem-in-america/
It’s a short poem but that’s absolutely what it says!
This is how it was taught in one of my American Lit classes! Basically either path would have “made all the difference” because that’s what choices inevitably do
I try to think of that whenever I'm in the slowest checkout line at the grocery store, or the slowest lane in traffic, etc. I try to tell myself, "Alright, this line seems like the slowest now, but if you'd gotten into that other one, it would have been even slower (even though it's cooking without you in it) - so this really is the best you could have done." Is that what he meant?
always great shares :)! thank you for sharing.
Very nice topic you covered....A year ago i rented a flat for 130 dollars here in my country India with my family but i have to pay for my drinking water..For every day use they providing very less water and the biggest problem is the pollution OMG not a single plant or tree around i have mild asthma and i am spending 30 dollars on my doctors fees and meds for 3 months and my 6 month old niece living with us she to has some cough here and there so i moved out of there and found a nice small flat in a VIP area with tons of woods around clean air,clean and free water but its a small and a little expensive home from previous one. but we can manage it...The best thing that our heath is good now...its for 180 dollars rent but fro 50 dollars more we have clean air,safe secure area,hospitals are near free water less electricity cost lest internet cost with fast speed 24 hours of water....so for me its a wins and now my niece is 1 years old and happy...😀
People who studied Economics for GCSE's: *"I know what opportunity cost it"*
Have you studied economy?
@@tasnimsarker4653 Yep . I studied Economics. I recieved a grade 6 for GCSE economics. I didn't take it for A levels though
Well done on your well balanced approach in describing the topic.
Very good vid, thank you. My personal experience is most dont think this way. Only thing missing from the vid, which I'm sure your aware of but probably left out due to simplicity is the opportunity cost of putting the money in an asset like stocks, which compound over time. So that bright shiny car that you want vs needs doesn't actually cost you 50k its 100k over a 10yrs period.
I absolutely love this channel. These videos truly speak to me!
Best opportunity cost for me was when i decided to buy a $2000 macbook pro or upgrade ssd and ram on my old laptop for $60. I took the latter path and never been happier.
I have spent my whole life miserable by keep calculating the opportunity cost after taking a different decision and thinking what would have been if I would have taken another route from marriage to financial decisions. Every decision costed me so much in opportunity cost in terms of happiness and finances that makes me sad and ultimately makes me to under perform. I guess others too would have felt the same
What kind of job experience are you going to get without a college degree? Retail.
This is a very important video and very informational. THANKS!
Thank You so much
Great video idea. .Thank you very much ❤
I love that the storyline was different 💜 You guys are awesome 😊
Thank you so much this video help me see the problem in my life
thanks for the great content
I just learned that cost of enjoying life is called opportunity cost. Great video! I agree with the video there is no cost for life experience. Enjoy life at least once!.
Thank you for your videos 😇
I really enjoy your videos. Ty!
great work, i love this channel !
Love this topic!
I love you guys so much! You are so entertaining and educational :)
I love your videos. Thank you both for all you do.
Great content as always !
You guys are awesome. You explained this concept so well and covered so much in a very short video.
Vic should’ve applied the concept of sunk cost. If the concert experience wasn’t that great then he should’ve left and use his time for something that would give him more utilityI instead of staying because he paid for the ticket.
I just learned these concepts in a class of macroeconomics.
Thank you for all you do! You guys are the best!
I do love your chanel. Every American should watch your vids.....
Your videos are fantastic and a source of help that is constructive towards others and effective.
"What am I saying NO to, in order to say YES to this?" Asking this question has helped me weigh the possible consequences of my choices. It's also helped me to discern how I may need to adjust my charges for services rendered.
thanks for sharing, gonna use this!
love ur videos thx for all the education :)
I love you guys .....just keep posting
I like the animated backgrounds. Thanks God it finally come back.
You guys have always great insight and the quality of your content is amazing. Thank you so much, you make me a better person!
I love you guys! Keep up the good videos.
Knowing which opportunities to take
*And*
Which opportunities not to take is an important skill in business 💯💯
This channel is amazing!
I made some decisions based on the scenarios presented-1st-how much have I made for the week already will determine if I go to the concert or catch the next one(almost always another one). Can I compromise and just work half the shift and get coverage or ask off for the other half?(option?) Are they even good seats? 2) Try to sell the vintage wine first (personal decision I would just rather have the money). I can always drink it with someone if it doesn't sell-satisfying win-win for me. Would make for a great surprise for someone special! 3) Life is short! Give me my time back so I can maintain my sanity! Opportunity vs Sanity, but if the savings to commute is significant meaning $200 a month and up for me-More time than money! Lolol! No problem making these decisions. That's my 2 cents! Great video!
I just love this channel. Are there any books to learn more about these financial jargons?
The website investopedia is amazing for technical jargon, it's where they got the opportunity cost definition from
Thank you guys. This is insightful for smart decision making
I love this explanation
Thanks!
You make really good quality videos!!! Thumbs up 👍👍👍
Bless this show
"Something better to do," nice economics pun.