How To Waste A Raise
Will You Waste Your Raise This Year?
You may know about “Murphy’s law” or even “Newton’s law” but have you heard about Parkinson’s Law?
In 1955 a British historian wrote what is called: “Parkinson’s Law” when he said that “work expands to fill the time available for its completion.“
Basically, it is the principle that demand will expand to consume all available resources.
The law suggests that the amount of work expands, regardless of its actual complexity, to fit the time allotted for its completion.
So, if you had five weeks to complete a project, then surprise, surprise, you’ll take up the full five weeks to do it. Whereas, if you just gave yourself five days to do it, you’d be forced to be super focused, super-efficient, and somehow you would get it all done in just a few days.
This concept can also be applied to money.
Where Did All My Money Go?
Have you noticed how when you first got a job as a teen (maybe earning R1000 a month) you spent that much money.
But now, after many years and many pay rises you are spending the much larger amount that you now earn. You may even be spending more than you earn.
Parkinson’s Law = Your spending has expanded to consume all available money.
Whether you’re earning R5,000, R15,000 or R150,000, your expenses will keep increasing to consume all available money.
Don’t Let That Happen This Year
If you have been making ends meet on your current salary (ok, it’s probably been a squeeze because you may not have successfully adjusted your spending to offset inflation), then you have a chance to break Parkinson’s Law this year.
‘you have a chance to break Parkinson’s Law this year’
So, if you’re earning R12,000 a month and making ends meet, not starving, and then you get a pay increase, pushing your income up to R13,000, most people at this stage are going to think, “Yay, I have an extra R1,000 to improve my lifestyle.“
It’s normal to want to use your money in this way, but it does not actually help you in the long run, especially if you already have debt.
This year, why not take that increase, whatever it happens to be and either (1) save it for a rainy day or (2) funnel that increase into paying off your debts faster.
The longer you are in debt, the more opportunities you have to mess up and get into trouble while repaying what you owe.
Tip: If you have accounts with high interest rates, try focus paying off those debts (especially if they are smaller debts).
Tip: If you are in debt review, talk to your Debt Counsellor about how you can get the most benefit out of that extra amount each month.
By using your new funds in this way, you can potentially close smaller accounts and start your debt repayments snowballing.
Things are very expensive these days, and you may feel you need to use any increase to cover your increased costs. But before you do that this year, consider (or ask an expert) how you can reduce your monthly expenses. Then you may be able to use the extra funds to save something or to start to settle smaller debts.
Don’t fall into the trap of spending every cent you get each month. Don’t waste your raise by letting your expenses grow to use it all.