Are you making more money now than you were 10 years ago yet at the end of the month there is still nothing left over? It seems no matter how much money you make there is just never enough. If this sounds familiar, there is a simple answer as to why and one thing you must fix to change it.
You never have enough money because as your income rises, so do your expenses. You are a victim of Parkinson’s Law of Expenditures and the only way out is to violate this law. In this article I will show you how.
What is Parkinson’s Law
First lets look at exactly what is the sociological phenomenon known as Parkinson’s Law.
The Principle
Work expands to fill the time available for its completion.
The concept behind Parkinson’s Law is that a task that is given a week to accomplish will take a week. Give that same task a deadline of 2 hours and it will be completed in 2 hours. The theory is that, psychologically the task will increase in complexity and become more daunting so as to fill that week.
For example, waking up early on Sunday to mow the lawn finishing at dinner time.
History
Cyril Northcote Parkinson, the famous British historian and author, first wrote his famous quote in 1955. It first appeared as the opening line in an article for The Economist and later becoming the focus of one of Parkinson’s books, Parkinson’s Law: The Pursuit of Progress.
Sociological and Psychological Phenomenon
The psychological premise behind Parkinson’s Law is more than just simple procrastination. It involves the growth of complexity with the original task. So for example if the task is writing a paper for English class that is not due for a week, you may put it off until the last day but there are other factors at work. Perhaps you are caused stress by the thought of having to complete the paper and this makes the task take even longer.
Parkinson’s Law is a phenomenon that can be applied in many situations other than work productivity and the principal still holds true. Here are some other examples.
Examples
Parkinson’s Law states that work expands to fill the time available but what about belongings. You can apply Parkinson’s Law to the amount of stuff you own expanding in relation to the amount of space you have to store it.
Ever move to a larger home or apartment? It is empty at first but it won’t be long until every corner is filled with stuff.
Here is another example. Ever eat a buffet? Your appetite increases in relation to the amount of food on your plate.
And the reason you are here, your finances.
Financial Derivative
A derivative of Parkinson’s law is that your expenses will expand to meet your income. As you earn more money, your spending increases. Therefore, in order to succeed financially, you need to break Parkinson’s law when it comes to money.
Parkinson’s Law: The one Law you should break. Here’s how
There are 4 things you must do in order to break Parkinson’s Law with regards to your finances.
- Be aware of what is happening
- Set Limits
- Automate
- Hide money from yourself
Awareness is key here. Hopefully this article has opened your eyes to what is happening. I always had a vague, undefined idea of Parkinson’s Law in the back of my mind. Putting a name to it and understanding it has opened my eyes to the possibility of their being a solution. After all, if the mind can conjure up a way to complicate simple tasks, perhaps the opposite is possible. Could I reverse Parkinson’s Law to benefit me?
Hmmm. Perhaps w can expand it to…
Work expands to fill the time for its completion, therefore If deadlines are shortened, work will be completed more efficiently.
If we apply this to money it might sound something like this…
The money I spend is directly related to the money available to me, therefore in order to save I must make it so the money is never available to me. (Set Limits)
Think of income taxes. That money is never available to you therefore you don’t miss it. You learn to live without it. Why not treat a portion of your salary the same way and put it into savings. (Automate the withdrawls and hide it from yourself)
Once you realize that you are a victim of Parkinson’s Law, you must break the law. It is the only way to reclaim what is rightfully yours. Your financial freedom.
Here are 3 immediate actions to take
1. Automate your savings
Automatically deposit a 15% percent of your salary into a savings account. Don’t think about it, don’t even budget for it. Just do it. Parkinson’s Law states that you will figure our how to live on what is left.
2. Increase your savings every time you receive a raise.
Part of the reason you are still broke every month is because every time you received a raise in the past, you increased your monthly expenses. Stop it. Next time you get a raise, add it to your automatic deposits.
*Expert Tip* If you are participating with your company 401k plan, they make these 2 steps easy for you. Simply increase your weekly contribution to 15% and then change the annual auto increase to whatever amount your typical raise is.
3. Review all of your expenses
As the Law states, your expenses will rise to meet your income. Perhaps now that you are aware of what is happening it is time to take control of said expenses. Do you really need the full cable package? Maybe one of your streaming subscriptions needs to go. When was the last time you tried to lower your car insurance? How about your credit card interest rates? It is time to set your spending limits and take control by breaking the law.
Best of Luck
Earl
Here are 10 insanely easy tips for cutting spending that will help you to Violate Parkinson’s Law!