What are you willing to do?

Posted: September 24, 2008 in Blogging, blogroll, Community, Consumer Issues, education, Family, Finance For Youth, Jobs, Life, Relationships, Saving, School, Spending, Working

Sorry about the dearth of posting lately.  I’ve been involved in some situations that took away from my time.  I can’t promise that I’m out of the woods yet, but I’m starting to see daylight.  Once everything is over, I will tell you all about it, but I don’t want to jeopardize events as they are now.

Anyways, I remember watching a movie a few years ago that had one of the best quotes.  The movie, THE UNTOUCHABLES, has one scene where Sean Connery was asking Kevin Costner what he was willing to do to capture AL CAPONE.  What he was really asking was what Kevin Costner was willing to give up in order to catch Capone.  In economics, this is called OPPORTUNITY COST.  In a nutshell, opportunity cost is what are you giving up in order to get something; or what was the next best choice.

This is huge for young people.  In one of my classes, I offered my students an imaginary $500.00 with the rule that they had to spend it buying one of a list of items.  The items, a 16GB I-PHONE, a 32GB I-POD TOUCH, X-BOX 360 ELITE, and $1,000.00 worth of EE U.S. SAVINGS BONDS.  Most of the students initially selected the x-box until one student pointed out that the games would become obsolete and they would have no more money.  We all agreed to take the x-box off the table, and most of the students decided to buy the bonds.  In fact, when other flavors of x-box 360 were made available, along with other versions of i-phone, i-pod touch, and savings bond that would allow them to buy more than one item, students overwhelmingly went with buying a cheaper x-box and more bonds.

I’m not saying that buying bonds is always the best choice, but I really think young people need to start asking themselves what are they giving up by making the choices they are making.  When I chose to become a teacher, I gave up on sleeping in late, working with adults, and other things.  I was willing to give those things because there were other benefits that I wanted.  I’ve mentioned before that I’m a smoker.  When I light up, I’m giving up being able to walk freely wherever I choose.  I’m giving up a positive first impression with whoever sees me smoking.  Of course choosing to not light up makes me give up other things.

When you buy something, or even when you make the decision that you are going to buy anything, think about what you are giving up by making that purchase.  Think about whether or not you are willing to give up something in favor of something else.

Advertisements
Comments
  1. Craig says:

    That is true, and I’m lucky to learn about opportunity cost in high school as well. I like the experiment you did with them as class activities is always popular with students. The reality is though there is far more opportunity cost than even the options you gave the students. And the concept works with more than just money and buying a product or saving. Good post and I agree that younger people need to learn earlier about their finances, although as a recent college grad myself, it’s not always easy to look far down the road.

    Craig
    http://www.budgetpulse.com

  2. That’s a good post. I have similar feelings about people who buy new cars. I just don’t see the point in it. They’re throwing their money down the drain because these cars depreciate rapidly as soon as they’re off the forecourt.

  3. Gerry says:

    Just to underscore what you’re saying, I think young people should look at every purchase as if they were buying an asset or making an investment. I can’t tell you how many times I’ve seen people buy things and treat them as single use disposables. What ever happened to the days when people bought one pair of sneakers at a time or one watch at a time for that matter. We should be taking the time to think about everyday purchases like clothes and consider their necessity, quality, and return on investment. So much of what teens buy today ends up in a landfill or a junk closet less than six months after they bring it home. What we should be willing to do as parents and teachers is show younger generations how to make value judgments base on things like opportunity costs as you so aptly described.

    PS. I like your site and plan to mention it to my students and friends.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s