Opportunity cost
What it means
Opportunity cost is the value of the next-best alternative given up when making a choice. It can involve time, money or another scarce resource. It is not the sum of every possible alternative you did not choose.
Related skills
Identify alternativesName the realistic next-best use of the resource.
Compare consequencesInclude time, access and likely benefits.
State uncertaintySeparate known costs from hoped-for outcomes.
An everyday example
If a Saturday can be used for a training session or a paid shift, choosing the session gives up the value of the next-best alternative, which may be that shift. Consider the learning benefit and the missed earnings separately.
What to check
An expense already paid and unrecoverable is a sunk cost. Compare future options on what can still change rather than treating past spending as a reason to continue.