Parkinson’s Law is one of the best known and most essential laws of money because of its direct impact on our long-term financial future. It states that as your income increases so does your expenses. It means your expenses will always increase to meet up with your income. If certain care is not taken, the impact of this on your long-term financial future can be very devastating.
It stipulates that you have a natural tendency to spend everything you make – and that is not wise. It is not the way to go. It is exactly how to lead you away from the kind of financial future you would like to create so it becomes expedient to know how to break this law and make it work in your favour rather than against your future. The wisdom here is getting to know how to control your expenses so that you don’t jeopardize your financial potentials.
Psychologically speaking, when you make more money or get a better paying job, your appetite for things begins to increase. You start seeing things you would have missed if you do not have more money or enough money. Now, there is enough money and you have an innate hunger for more things. The irony of this is that you spend more on things that really do not guarantee you a better financial future. It’s usually about things that are here and now. Financial plan and discipline is therefore necessary to curb your natural tendency to increase your expenses simply because your income has increased.
The Parkinson’s Law of money reveals the root of all financial traps.
- The Trap of Debts
A lot of people are struggling with personal debts. They carry a burden that is a result of mismanagement of personal finance. If you do not take charge and full responsibility for your finances, you will fall into the trap of debts.
Many a times, some people don’t even know they are heading for a debt trap and by the time they come to terms with this, it is rather too late. Debt by itself is neither good nor bad; it all depends on how you use it. If you mismanage a personal debt, you will disrupt your personal finance flow. Too much debt is a trap every reasonable person must endeavour to avoid; it puts your personal finance in a jam especially when not properly structured and managed. It creates tensions and worries that I believe you don’t want to live with.
Ralph Waldo Emerson remarked, ‘A man in debt is so far a slave.‘ He becomes a slave of circumstance and an object of control. His personal finance becomes subjected to external forces. My counsel is: do away with debt as much as you can if you truly desire financial stability and freedom. Debt will keep you under.
- The Trap of Financial Worries
Worry is one of the most common and destructive habits. Worrying over money is even more pathetic and disturbing. Its impact on the human health is unspeakable. It usually starts slowly then graduates into something out of control. Financial worry is a trap that attracts horrendous consequences. The question is, why do people have financial worry?
Many people worry about their financial future because they simply haven’t done enough to put their financial life on a winning track. They have done many things with money except the important ones. When they start getting worried, it is an indication of financial insecurity. It simply means they haven’t done enough.
People also get financially worried when there are things they want to do with money and there seems to be shortage of it. George Bernard Shaw was right, “People become attached to their burdens sometimes more than the burdens are attached to them”. Whatever the issue you are trying to resolve is, you must understand that worry is a trap not a way out!
3. The Trap of Waste Pipes
Again, it is natural to want to spend more simply because you are making more money. You want to move from a low profile environment to a highbrow area. You want to change your car and get the latest brand of automobile. You want to change a lot of things in your life including your home appliances and clothing. While nothing is wrong with the desire to have something better, it may have devastating consequences on your financial future if you don’t streamline your expenses. You must be deliberate on cutting down on your personal expenses in order to channel the resources into things that will make your tomorrow better.
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