Opportunity Cost vs Leverage

Hi everyone,

Wow, wow, wow! I’m writing this after having a session with my mentor and I have so many thoughts and ideas flowing through my brain – all around opportunity cost and leverage.

Opportunity cost is the simple idea that by choosing one path (or not), another path will be taken. Simply, if you decide to not study, you’re probably taking a path down procrastination.

Time always passes and so, there is an inherent opportunity cost to everything. In the past few newsletters I’ve posted, I’ve been deliberating the opportunity cost of many aspects of my life like tutoring. Now I’ve almost removed all tutoring from my life since the short-term financial benefit does not create leverage in my life.

Tutoring provides me with a way to uniquely and intimately help a student, however, if this were all that I did, there is a cap to how many students I can tutor, how much time (and energy) I can afford to give to students. It’s not scalable and straps me to my time. It also limits the impact I can have in helping people.

By choosing to do tutoring for short-term financial gain, it doesn’t provide me the opportunity to create freedom and flexibility in my life – two very important considerations for me.

There are many types of leverage that we should consider that is discussed simply by Financial Mentor:

  • Financial leverage
  • Time leverage
  • Systems and Technology leverage
  • Marketing leverage
  • Network leverage
  • Knowledge leverage

For students, this may not seem like an important consideration, but the pure virtue of having an education is an investment in your knowledge which has an inherent opportunity cost.

By not getting a job immediately and focusing on our studies we hope that in the future, we’ll be much better off financially and otherwise.

Leveraging knowledge has always been imperative for me. From a very young age, I’ve always been up-skilling myself so that by the time I need a certain skill, I’ll have it already.

Nowadays, I’m focusing a lot on time, systems and technology to create long-term leverage. This year, I had reached my absolute max for how much I could work – working 17 hours straight for 5 days in a row – a recipe for burnout.

My studies have become the lowest priority for me since I began to learn how to study, to the point where I have a perfect GPA while studying as little as possible. Currently I’m doing a full evaluation of the opportunity cost created by how I’m using my time – is it better to spend time keeping my perfect GPA, or use that to grow something else?? Is it better to focus on getting bulk or to grow a business instead? Is it better to for me to teach students or train new tutors in how to fill my spot?

My prioritisation is ever-changing. When it comes to projecting my priorities long-term, this is always much harder than I expect, but I’m happy to take everything on as it comes!

These questions are littering my mind! Hopefully it sparks some thought for you too.