Opportunity costs is a mental model to take into account the true cost of all options before making a decision.
Opportunity costs are a way of making decisions by looking at all the options available and choosing the one that has the lowest cost by taking into account the true cost of all options taken together.
The first step in using opportunity costs to make decisions is to list out all of the options available to you. Once you have done this, you need to calculate the true cost of each option. This includes both the monetary cost and the opportunity cost.
For example, if you're considering going to college, you need to calculate the tuition cost as well as the opportunity cost of not working. Another example would be if you're considering taking a new job, you need to calculate the salary and the opportunity cost of not working at your current job.
After you have calculated the true cost of each option, you can then compare the options and choose the one with the lowest true cost. This will help you make the best decision for your career.
One important thing to keep in mind when using opportunity costs is that you should only consider the future costs and not the past costs.
For example, if you're considering taking a new job, you shouldn't compare the salary of the new job to your current salary. This is because your current salary doesn't matter when you're making a decision about the future.
Instead, you should compare the new job's salary to the opportunity cost of not working at your current job. This will help you make a more informed decision about whether or not taking the new job is worth it.
Opportunity costs can be a useful tool for making decisions about your career. By taking into account the true cost of all options, you can make sure that you're making the best decision for your future.