Sunk Cost Fallacy

The sunk cost fallacy is the tendency to continue investing time, money, or effort into something because you've already invested heavily, even when it would be better to cut your losses and move on.

Wedding Examples:

• Continuing with an expensive venue because you've already paid a $2,000 deposit
• Keeping a photographer you don't like because you've paid 50% upfront
• Not canceling a wedding you're having second thoughts about because you've spent $10,000

The Psychology: We hate "wasting" money we've already spent, so we throw good money after bad to justify our initial investment.

The Reality: Sunk costs are gone forever. The only question that matters is: "What's the best decision going forward?"

How to Avoid It:

1. Ask: "If I were starting fresh today, would I make this choice?"
2. Focus on future costs and benefits, not past investments
3. Set clear criteria for when to cut losses
4. Remember: The money is already gone—don't let it control future decisions

Financial Impact: Sunk cost fallacy can cost thousands in bad decisions, from staying in expensive relationships to continuing with poor investments.