Opportunity Cost Analysis

Opportunity cost analysis is the process of evaluating what you give up when choosing one option over another. In everyday decisions, whether investing time, money, or resources, the opportunity cost represents the benefits you miss from the next best alternative. For instance, if you spend money on a vacation instead of saving for a home, the opportunity cost is the potential value that savings could have generated. Understanding these trade-offs helps make informed choices by highlighting the true cost of decisions, ensuring you align your actions with your priorities and goals.