Sunk costs

The Money Engineer

There is a concept in financial management called “sunk costs.” A sunk cost is a cost which has already been incurred. When we are appraising whether an investment will pay off or not we disregard sunk costs.

We do not consider sunk costs in decision making because they are no longer relevant to the future. So when we are looking at an investment we should only consider future prospects. What happened in the past nolonger matters. It doesn’t matter if you have failed a million times before. You can still succeed in the future.

As a matter of fact everything in your past is irrelevant to your future success. The only thing that matters is the future you are clearly heading to.

So stop focussing on the sunk costs in your life. Choose instead to see the bright future ahead of you.

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