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## Opportunity cost and your career

July 31, 2019

### “Opportunity cost” refers to what you can potentially lose by choosing one option over another – even when you aren’t thinking about it.

Nearly every choice you make precludes something else that might have been.

Opportunity cost exists in everything from relationships to finances to career choices, but here we’ll focus on that last one. Over a lifetime, the cost of career decisions can be massive.

The math
For opportunity costs that can be measured, usually in dollars, there’s even a math equation. What I sacrifice / What I gain = Opportunity cost[i]

Let’s say you have two career choices. One is to work as a mechanic at \$50 per hour and the other is to work as a karate instructor at \$20 per hour.

Opportunity A / Opportunity B = Opportunity cost

Here it is with numbers: \$50 / \$20 = \$2.50

To translate that, for every \$1 you earn as a karate instructor, you could have earned \$2.50 as a mechanic. The ratio remains the same whether it’s for one hour worked or 1,000 hours worked because it’s based on earnings per hour.