Prioritze Your Spending and Take Control
Brad Baker
In economics, there is a term called opportunity cost. I strongly believe in this concept with everything that I do. Basically it means what are you giving up when you make a choice. This applies to many different ideas but here we will talk about the opportunity cost of purchases.
Every time you make a purchase you are making a choice to hand over your hard-earned dollars in exchange for something else. This is why a function of money is known as a “medium of exchange”. When you decide to give your money away for choice A, then all other choices are no longer available to you. You may have more money to still buy choice B or C but you are now using different money than what was used for Choice A and your total amount is diminishing each time you spend. This is why it’s crucial to prioritize needs over wants and make thoughtful decisions about how you allocate your resources. To manage family spending effectively, it’s important to create a budget, track expenses, and ensure that your spending aligns with your financial goals. By doing so, you can make the most of your money while avoiding unnecessary financial stress.
How do we take control?
Example:
- Occasional alcohol $30
- Go out to eat once a week $200
- Take the family to a movie once a month $50
- Save at least $100
- Save at least $100
- Take the family to a movie once a month $50
- Buy occasional alcohol $30
- Go out to eat once a week $200
