The benefits of understanding economics for daily life

The word econimi is not unfamiliar to you right? Then what are the benefits of economics itself? Economics provides a framework for understanding how individuals and societies allocate scarce resources. Key concepts such as supply and demand, opportunity cost and externalities directly influence everyday decisions and outcomes. 

1. Personal Financial Management

The first benefit is certainly contained in economic principles such as a priority scale that allows an individual to prioritize what is more important than that in economics also regulates consumption needs called economic behavior in choosing goods and services based on the quality and quantity needed when carrying out economic activities. By studying economics helps individuals to make the right decisions because not all the money we have now will be spent to buy human needs that are unlimited in number while the human ability to meet their needs is limited by money or material. Of course we have to think about becoming rich in the future, right? Therefore we must set aside our money for future needs by saving or investing from small capital in a safe place of course.

The author's tip "If you are not yet successful or rich, buy goods or services by considering the quantity aspect because buying quality means you increase the expenditure budget" 

2. benefits of economic concepts

In economics there are 2 concepts in making more rational decisions including trade-offs and opportunity costs. 

Trade-offs 

first let's know what trade-offs are in decision making. In general, trade-off is an economic concept that refers to the sacrifice of something that is considered more important as a result of things that are considered less important will be sacrificed. While in reality, trade-offs are often used when someone has to make a decision when there are two or more choices. For example:

A worker who has two choices on his day off between entering overtime or choosing to spend time with family and friends. if the worker is concerned with money for additional income, of course the worker prefers to work again with enthusiasm, but if the worker feels tired of his work, of course he chooses to take a vacation because overtime is not required for workers and then spends his time off for family or just resting at home.

Opportunity Cost

Opportunity cost is an economic concept that refers to the best benefit from the results of decision making. More precisely, opportunity cost is a decision-making process based on the best benefits. Example of opportunity cost: 

A student who is assigned homework. Choose to do it now so that you can play later or prefer to play first and then do the assignment. If you are smarter, of course you prefer to do the assignment first and then do other things, right?

Conclusion

Economics equips individuals to make informed choices, navigate financial challenges, and understand broader market trends. By applying concepts like opportunity cost and behavioral insights, daily decisions become more strategic, enhancing both personal and societal well-being.