Lesson 2 of 3 · 7 min
What a purchase actually costs
The tag price is the smaller of two numbers. The other one changes with your age, which is why one phone costs a nineteen-year-old more than an uncle.
The price on the tag is not the price. The price of anything is the best thing you did not do with that money — and where money is concerned, that alternative is not a fixed figure, because money can grow.
A ₹60,000 phone costs ₹60,000 today. It also costs whatever that ₹60,000 would have turned into by the time you would otherwise have spent it. That second figure has a name — opportunity cost — and it is the only one of the two that changes with how old you are.
| What happens to the ₹60,000 | After 1 year | After 10 years |
|---|---|---|
| Left where it earns 7.7% a year | ₹64,620 | About ₹1,26,000 |
| Spent on the phone | A one-year-old phone | A phone in a drawer |
| So the true price of the phone is | ₹64,620 | About ₹1,26,000 |
Match them up
Four prices and what they really are
Pick the item, then pick what it actually costs.
Pick a term on the left.
Quick check
Two people each spend ₹60,000 on the same phone. One is nineteen, one is fifty-five. Who pays more for it?
None of this says spend nothing. A phone you use for four years, or a course that changes what you can earn, both have something real on the other side of the payment. Having a cost and being a mistake are two different things.
The point of the arithmetic is narrower than a lecture about thrift: it sets the two prices side by side so the choice gets made with both of them visible. Most people only ever meet the one on the tag. The second turns up years later, disguised as the question "where did it all go".
Check yourself
1 / 3
Kabir asks
What is the real price of a ₹60,000 phone?
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