Personal Finance

What Is a Sunk Cost?

A sunk cost is money, time, or effort that has already been spent and cannot be recovered, whatever is decided next. The sunk cost fallacy is the tendency to continue with something because of what has already been invested, rather than based on future costs and benefits.

Sunk Cost vs. Opportunity Cost

A sunk cost is in the past and unchangeable; an opportunity cost is the value of alternatives given up by a future choice. Standard economic reasoning compares only future costs and benefits.

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🔗 Related Terms

Opportunity Cost Break-Even Point Budget

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.