Parkinson’s law is the adage that “work expands so as to fill the time available for its completion”. It is sometimes applied to the growth of bureaucracy in an organisation.

A derivative of Parkinson’s law is that expenditures rise to meet income. As you earn more money, your needs increase and you end up spending more money. Therefore, in order to succeed financially, you need to break Parkinson’s law when it comes to money.

Imagine two households, average income per household and circumstances roughly the same, average working life span 40 years.

One household pays down their mortgage, doesn’t put themselves in further debt, saves, invests and has the insurance cover they want in place.

Household two spend what they earn every month. Save very little and only for the short term (annual holidays) and borrow to invest.

These two households will have earned the same amount over their working lifetimes, however, one will be financially free much sooner than the other.

As it’s often said, it’s not what you earn but how much of it you keep.  

Parkinson’s Law is something to keep in mind if your salary or profit share increases. How much of this will be saved or invested for your future? To become financially successful, you must be aware of how much you can live on and how much you need to put by for your future.

With any increase, if you don’t have the savings you would like to have in place, put it all into savings (if you were managing okay without this). Don’t let your expenses rise to meet your income.

If you haven’t got a good hold on your monthly budget (what you can live on), then create a small spreadsheet or record of what you spend your cash on from now until this time next month. This will be your starting point. Clearly there will be months when you have additional expenditure, but for the most part, these items can be planned for.

When you know the minimum you need to live on per month, start the habit of transferring money into your savings account each month. Get used to not having the cash to spend and living on what is left in your current account. Forming new habits they say takes 21 days. Watching where your money is going each day and week is a great habit. Notice if there is any unnecessary spending.  In my experience, there always is.

If you’re serious about becoming financially free in your lifetime and want to be in the ‘household number one’ example above, take steps to start saving more, investing more and look at your insurance cover in place for your household and business.

Decide to become financially free and take action to ensure it happens. Don’t ‘wish’ it to happen. Take control of your financial future yourself.

For more information or to contact Wendy – email : wendy@williamsmerrigan.ie