Episode 062: Opportunity Cost and Raising a Successful Family with Alison J. Prince

Our Modern Heritage: The Home & Family Culture Podcast

I first learned this concept of opportunity cost in a personal finance class in college. I have learned this lesson the hard way many times. I recently taught my daughter this concept when she was so excited to get two dollars for her birthday, and was anxious to spend it. So, when she heard the ice cream truck coming, she bolting without a second thought and came back with two popsicles to share with her siblings. I was proud of her for thinking of everyone else and that she wanted them to share in her abundance. But then I told her that we probably could have gotten a box of popsicles with her money, and asked if that was the best way to spend her cash. I felt terrible after that because she was really upset that she had acted so hastily without thinking. I think she has learned since then that money (especially so little) comes and goes. Bu the lesson still holds, there is an opportunity cost associated with how we spend our time and money. I hope my daughter learns that lesson well. I hope she will always weigh out the outcome of all of her expenditures. The thing is, which is more precious? Time, or money? Money can be recouped even if it is difficult. But time is something that we will never get back. Once you have found an effective way to make money, I think it is valid to spend your time wisely, and decide wether the expense is worth the cost. Yet, we value our time so cheaply. I once passed up the chance to stand in line for a free sandwich from a great restaurant because the line wrapped around the building. I would have taken more than an hour to get through the line. Isn't my time worth more than $5 an hour or less? But, if someone came up to me and told me they had a job for me that paid $5 an hour, I would turn them down flat! What a joke! My time is worth more than that! That is the opportunity cost associated with how we value our time. Don't waste your time for things that have no worth. Alison told me about how her lifestyle has changed over the years since she discover eCommerce. When she had her husband were first married, they qualified for food stamps! Alison learned the value of innovation and figuring out what she could do to support her family on her terms. The reality is that we are all taught to value our time based on what we can get paid. When Alison learned that her employment wouldn't pay her enough to feed her family, she knew she could not be limited by the constructs of time = money! She found a way to leverage her time to expedite her value in a way we don't learn when we are told in a conventional economy. Entrepreneurship is a roller-coaster ride of ups and downs. It is risky. But, there is an opportunity cost to finding success. You can continue to trade your time for money, and be valued by how much you can make an hour. Or, you can push through the risk of finding a new path and tackle the opportunity cost of learning to grow your potential exponentially. Since starting her million-dollar businesses, and teaching her children how to do eCommerce, they have a new perspective on the time-value of money. They appreciate the trade-off of doing something they love to do and use the resources they have available to get everything done that needs to get done. They have been learning that you don't have to devote all your energy to accomplishing tasks you can delegate to others. More than the opportunity cost this provides, it has allowed Alison and her kids to learn that they have choice. They have learned that they have options available to them that you don't consider when you don't have the ability to delegate. This is a subtle mindset shift, but it is one that supports innovation, and creativity. Alison has taught her daughters how to run a business, and with that, they have learned the time-value of money -- something they don't teach you in school. Since they make their own income, her daughters are expected to buy their own things.