April 9, 2013

Opportunity cost, revisited….

Opportunity320When I was a junior at SMU (Southern Methodist, in Dallas, not the many other SMU’s out there), I took an introductory accounting class to jump start my business minor. I had a major in English and the job interviews were sparse. In my (parents’) panic, I signed on as a business minor. I must admit that the education came in handy later on when I opened my own psychology practice, but the coursework wasn’t thrilling. Especially accounting. I now pay someone to know the cutting edge accounting practices, but back then, I had to learn the lingo. One of the concepts that I took to heart: Opportunity cost.

It’s the idea that, when you are tallying up costs of doing business, you should also take into account the “cost of lost opportunity.” In other words: if you weren’t spending all these hours studying accounting, what might you be spending your time, ecstatically, doing? (Ummm, that’s not one of the class examples, but you get my drift.)

This is one of those ‘fuzzy’ accounting terms that English/Psychology majors love. It’s hard to pin down, difficult to quantify, but so intriguing. It’s costing you to do stuff you don’t love!! Revolutionary!

I was coaching a client recently, a whip-smart woman who doesn’t realize just how smart & experienced she really is. She’s in a job that’s hard on her soul. But, she’s good at it, and she makes lots of money, and she hires lots of people (coach, trainer, cleaning service, babysitter, party planner, psychiatrist, personal assistant) to make her life manageable. I tentatively pointed out that fact: “You pay a lot of people to make your life work. Is it worth it to you?” Now, don’t get me wrong — if it were worth it to you, I would be cheerleading!!!!! Even if it didn’t make ‘financial’ sense. It only has to make sense to you.

Her reply? “OMG, it’s costing me a fortune to make this much money!!” Plus, she’s not happy. So, you do the math….

It’s such a relief, sometimes, to be reminded: “You get to live your life, your way, for you.” What’s the benefit, what’s the cost…to you? You get to figure it out. You get to decide. I’m glad to help you think it through.

Here’s to recouping lost opportunities! They’re waiting for us all….