In today’s episode, I discuss Parkinson's Law.
Norcote Parkinson wrote a book called Parkinson’s Law where he isolates some limitations of us all and particularly focuses in on the behavior of individuals within a group. In Parkinson’s Law he writes, “Work expands to meet the time envelope allowed.” Meaning if we have 5 days to complete a task, it will take us 5 days to complete the task. If we were allowed 30 days to complete the same task, we would take 30 days to complete the task.
Parkinson’s law also states that, “a luxury, once enjoyed, becomes a necessity” and “expenses rise equal to income” In a financial context, we can define Parkinson’s Law as: the more you earn, the more you spend. When our income increases, our expenses rise to meet or exceed that increase. We are always working against Parkinson’s Law.
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Key Take Aways:
- We can combat Parkinson’s Law is by establishing an wealth infrastructure and system to beat it within your wealth plan.
- You can set up a separate account in which you can make weekly or monthly deposits. These deposits can be set as a fixed amount or a percentage of the money you earn. This will ensure that a percentage of very dollar that comes into your personal economy is automatically captured in a separate account.
- You can automate this infrastructure so it removes the “human element” from it
- How your “wealth capture account”, is a great vehicle to build liquid savings reserves that can be accessed for emergencies, as well as for capitalizing on investment opportunities.
“It’s not how much money you make, but how much you keep and how hard you make that money work for you that will determine if you will be rich or poor.” – Robert T. Kiyosaki
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