Opportunity Cost

An opportunity cost is the cost of something in exchange for a loss of an opportunity elsewhere. For instance if you decide to lease a car you end up with a brand new car.

However, if you decide to lease you also know that you will never own the car and be able to change it up or alter it nor will you be able to sell it in the future or give it to your kids. If you decide to buy a car you get the pleasure of knowing you own it, but after four or five years you're stuck in a five year old car while some people are driving around in new flashy cars. It's an oppurtunity cost.

In my personal life I spend $2.50 on Fiji water a day as opposed to spending $1 on Poland Spring. This gives me no advantage, just an easy way to lose money by foolishly spending it. I have no oppurtunity costwhat so ever.