Tommy Tyrannosaurus Rex went out to get dinner. He grabbed the first meal he saw but was still hungry for more. Tommy looked around the valley for some more and realized he had scared all the other potential meals away. He took his grumbling stomach home wishing he could get more food. Tommy made the mistake of jumping at the first food option without considering his options. A lot of people make the same mistake when they buy something and don’t think about the other options they have available. When you make a purchase, you lose out on other items you could have bought now and in the future. The future items that you miss out on buying is your opportunity cost. Before making a purchase, think about these three questions so the cost is worth the reward.

How much do I want this purchase?

If Tommy had taken the time to see how his first option for a meal would not fill him up, he would have realized that the value of the purchase is not worth it. When you are in the store and see a new toy, think about whether that toy is something you will use. You do not want to miss out on another toy you will actually use for a toy that will sit in the corner of your room.  

What am I giving up now to have this?

Tommy Tyrannosaurus Rex gave up all the other meal options that could have been a more filling meal by choosing to grab the first thing he saw. As you shop, you may like two items but you only can afford one. Think about which item you truly need and whether that outweighs not being able to get the second item.

What am I giving up in the future to have this now? 

Not only did Tommy not have enough to eat that night but he scared off other potential meals in the future because they know he goes to that area to get food, and they don’t want to be his next meal! Let us say you bought a great t-shirt a week ago but want to go to the movies with your friends now. If you had not spent the money on the t-shirt, you would have enough to go to the movies. Missing out on the movies is the cost of choosing to buy the t-shirt instead. 

Don’t be like Tommy Tyrannosaurus Rex and have your cost be more than your reward. Take your time on making your spending decisions and get the things you truly want! To learn more about your financial, check out Velocity Community Credit Union’s Youth Accounts.