I learned (courtesy: an introduction to irrational behavior, coursera) a new perspective of opportunity cost that can (in fact, it should) be applied to every single purchase we do. The concept is: 'if I make this purchase for 'x' money, what is it I will giving up in future?'.
Frankly, it took me a while to figure it out. But now that it has been dawning slowly upon me, I realized how important it can be in our decision making. The side effects are aplenty:
1. Makes us think a bit more on future spending.
2. Gives us a perspective how important is this purchase to the present time-frame
3. Compare our emotion or pleasure that we derive by making present purchase to something that can give much more in future,
4. Lastly, curbs impulsive purchases.
1. Makes us think a bit more on future spending.
2. Gives us a perspective how important is this purchase to the present time-frame
3. Compare our emotion or pleasure that we derive by making present purchase to something that can give much more in future,
4. Lastly, curbs impulsive purchases.
Many a time, step into a mall with no clear intention to buy or to-purchase list. Yet, step out of the mall with half dozen purchases, is pretty common phenomena.
On a experimental basis, I started creating and maintaining my to-purchase list. The list goes on the refrigerator listing out items (grocery and non-grocery) which are finished and need to be purchased.
When I started this exercise, I believed it should not make much of a difference, though I do indulge in impulsive spending occasionally and the amount splurged is not that big to take note. I believed I spend carefully.
Surprisingly, following this practice:
* firstly reduced the number of trips I used to make to purchase these 'necessary items'.
* secondly, I am amazed at how less is really required to purchase in comparison to what was being purchased earlier.
* most importantly makes me feel good about myself as I now purchase/consume responsibly. Avoids me to involve in over consumption and food wastage.
* lastly, how wrong I was in analyzing my spending patterns. I understand myself and my temptations better. But this list and opportunity cost twist curbs these temporary temptations and shows only real requirements.
* firstly reduced the number of trips I used to make to purchase these 'necessary items'.
* secondly, I am amazed at how less is really required to purchase in comparison to what was being purchased earlier.
* most importantly makes me feel good about myself as I now purchase/consume responsibly. Avoids me to involve in over consumption and food wastage.
* lastly, how wrong I was in analyzing my spending patterns. I understand myself and my temptations better. But this list and opportunity cost twist curbs these temporary temptations and shows only real requirements.
Sometimes, we should be taking such courses. Why I chose to do this course is a long story. But to put it in short, I know I am always irrational when it comes to a lot of things. The title of the course was apt and I wanted to understand human irrational behavior.
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