Baked-In Costs - Grasshopper

I first heard the term “baked-in costs” from a doctor, not a financial executive.

This doctor had performed two surgeries on me and they didn’t remedy my situation. He recommended a third. I, frustratedly, mentioned that I had already done two, along with countless other procedures. As an aside, this man was an avid investor who monitored his financial holdings religiously on a daily basis.

He said all the procedures I had up to that point were baked-in costs. I asked what that meant. He said, “Loses in the stock market were part of the game and to lament them does nothing to enhance your future position.”

My surgeries and procedures were baked-in, meaning they were not going to contribute anything to my future functioning.

It was a hard lesson to learn, but most realities are.

It got me to thinking about all the time we spend thinking about how things should have worked, instead of noticing that they didn’t. All the unsuccessful efforts we made are baked in, and pouring over them may get us an outpouring of sympathy, but no remedy.

Looking back on what we’ve done, may act as a reference of what not to do in the future, but dwelling on them as stupid mistakes, takes the cake.

It really doesn’t matter how you got here; it’s recognizing that you are here and looking for options that will take you where you want to go.

If I had a nickel for every time I’ve heard, “I’m this way because . . .”, I would be investing that windfall like my surgeon.

Whatever follows “because” is baked in and it won’t help you move forward. Noticing where you are right now and focusing on where you want to go, leaves baked-in in the past, and gives you a leg up in finding something that will last.

All the best,