Opportunity Cost
The value of the next-best thing you give up when you choose one use of money or time over another.
Opportunity cost is what you forgo by choosing one option over another. In finance it shows up everywhere: paying off a low-rate mortgage early means giving up the potential market returns those dollars could have earned; holding cash means giving up investment growth; spending now means giving up future compounded value.
It's the lens behind many planning tradeoffs — invest versus pay down debt, spend versus save, one account versus another. Thinking in opportunity cost keeps you focused on the real comparison: not 'is this good?' but 'is this better than what I'd otherwise do with the same dollars?'
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.