How to Simplify Your Decisions

An introduction to opportunity cost

When you don’t have money, everything is appealing. From nice clothes to souvenirs to a newer car — it all screams at you, “You want me! You need me!” The question is: Does it get easier to avoid materialism as you get better at handling money?


As you gain financial discipline, the power of “stuff” seems to fade slightly. After flexing your “no” muscle for months and years while you live on a tight budget, you will likely find it easier to resist the temptation to make superfluous purchases.

You no longer see purchases as a way to become happy. Instead, you begin to see purchases as forfeiting hard-earned money for an object. You are no longer blind to opportunity cost — the “cost” of choosing one option instead of another.

Understanding opportunity cost means thinking long term, big picture.

The thought of a new car is much less appealing, because the payment would compete with retirement contributions. Or it means you can’t pay off the house early. Or it means your wife can’t be a full-time mother to your children.

This concept hit me again recently when Bernadette — my 23-year-old motorcycle — needed another round of repairs. It made me desire a newer motorcycle. Specifically one with more power and less weight, of course. I subconsciously daydreamed of owning a good-looking replacement, even though mine is still in good shape given its age and miles.

Leave it to opportunity cost to grant me some perspective.

The temporarily happy thought of spending thousands of dollars on an unnecessary vehicle upgrade does not and cannot compare to my burning desire to start my own business. Suddenly, it is pretty easy to decide not to buy a newer motorcycle.

Grasping the concept of opportunity cost means realizing the true priority in a situation. Knowing the priority mutes materialism and decreases the lust for stuff.

And knowing the priority makes most decisions simple. Not necessarily easy — but simple.

What is your priority right now? (Hint: Pick just one.) How does it simplify the decisions you need to make?