Opportunity costs
The opportunity cost is the benefit you miss out on when choosing one option over another.
A classic example of opportunity cost is the amount of money you could have made if you had worked instead of doing something else.
Let’s say you are thinking about going on a one week unpaid vacation to Montreal, and you figured travel, food, lodging, and attractions will cost you $2,000. However, when deciding if you should go on this trip, you need to think about the opportunity cost: the amount of money you give up by taking an unpaid vacation. If, instead, you stayed at home in Alberta and worked at your minimum wage job at $15/ hour for 40 hours, you would make $600. Therefore, you should think of the trip as costing you $2,600 because you are giving up $600 in wages in addition to the money you would spend on the trip itself.
Although opportunity costs are invisible and easy to forget about, they are very real, and must be considered when weighing costs and benefits in order to make good decisions.
See also: cost-benefit analysis