If you turn right at an intersection to take the scenic route, then you don't turn left and head straight home.

If you have dinner at your favorite pizza restaurant tonight, then you don't have dinner at your favorite sushi restaurant. 

If you stay home with your spouse for the holidays, then you don't visit your kids and grandkids. 

Each of these decisions contains opportunity costs that we sometimes forget to weigh in the moment. 

The scenic route home might cost us more time and fuel, but the joy of a leisurely ride might outweigh those costs. 

You might save money eating pizza, but spending more on healthy sushi could be a better investment in your health. 

And is avoiding the hassle of holiday travel really worth missing out on precious memories with your loved ones?

In Life-Centered Financial Planning, it's important to consider how navigating major life transitions could impact not just your money but your Return on Life. Here are three examples of choices with major opportunity costs that most people experience at some point in their lives. 

1. Changing Jobs Versus Staying Put

Comfort and predictability can feel very valuable, especially in our careers. But unless you're working your dream job, the opportunity cost of staying at the same job can creep up on you. As scary as change can be, a new job could open up important opportunities that could change your career trajectory, as well as earning opportunities that could improve life for you and your family. 

Of course, leaving a job you've been working at for years isn't without risks as well. Even taking a "better" job at a new company could cost you some seniority. You might find that the actual day-to-day experience at a new workplace isn't as shiny as it looked when you were just taking a tour. You'll also be leaving behind years of institutional knowledge, as well as personal and professional relationships. 

2. Saving Versus Investing

As the Federal Reserve weighs another round of rate cuts, the benefits of parking cash in even "high-yield" savings accounts could dip. Considering the average rate of return on market investments is around 10% per year, the opportunity cost of earning a safe, predictable 2-3% -- or less -- might encourage some folks to reallocate more of their resources to brokerage and retirement accounts. As important as it is to save, learning how to embrace risk and harness the power of the markets is almost always essential to building wealth and securing retirement. 

On the other hand, the risks of investing are indeed real, especially for folks who go it alone. Even in a professionally designed portfolio, investments will go up and down over time. Make a bad investment, invest too heavily in one security, or make a panic move during a downturn, and those losses could be permanent.

And if your total financial portfolio isn't balanced and diversified, there could be real opportunity cost to allocating too much of your cash in investment accounts. If your car breaks down or your roof needs a repair, it might take a couple days to make a transfer from a brokerage account. That withdrawal might also have tax consequences. And if you tap into retirement accounts before age 59 1/2 the IRS could hit you with a 10% penalty on top of the taxes you'll owe. 

3. Retiring Versus Working Longer

From a financial perspective, the best time to retire is ... Never! If your main concern is building up your assets to hit a number, then there’s always going to be a higher number to hit if you work, earn, save, and invest just one more year. 

And then another. And then another. 

But the opportunity cost of delaying your transition into retirement might be far greater than the cushion you’re adding to your nest egg. Think of all those family vacations you’re delaying, all that leisurely golf and tennis with your spouse you’re missing, all the learning and growth that comes from organizing your days around the people and activities you love the most. 

Our Life-Centered Planning process and interactive tools can help you keep your money and all the things that money can’t buy in perspective. Let’s schedule a year-in-preview session and discuss opportunity costs to keep an eye on in 2025.