One Simple Budgeting Trick You Have To Try

Owen Winkelmolen

Financial planner, personal finance geek and founder of PlanEasy.

Have you ever had a project that just seems to last forever? Or maybe a chore that seems to take all weekend?

You may have never heard of Parkinson’s Law but you’ve probably experienced it. Parkinson’s Law is when “work expands to fill the time available for its completion”.

Simply put, if you have 3 hours to complete a task then it’s probably going to take 3 hours. If you have 3 days to complete a task then it’s probably going to take 3 days. The work expands to fill the time you have available.

Parkinson’s law applies to finances too. Lifestyle inflation is a great example of this. You get a raise and your lifestyle expands to match it. You spending increases until you’ve used up all your raise. Not necessarily because you needed it, not even because you wanted it, but because it was available.

Another good example is lottery winners. Lottery winners expand their spending to match the amount of money they have available. Whether thats $1,000 or $100 million. Lottery winners are notoriously spendthrift and that might be due to Parkinson’s Law (among other factors).

Thankfully you can use Parkinson’s Law to your advantage and if you struggle with budgeting then this is one simple budgeting trick you have to try.

Parkinson’s Law In Reverse

Parkinson’s law works in reverse. In reverse Parkinson’s Law says that “work shrinks to fill the time available for its completion”. So if you only give yourself 1 hour to complete a task then the work will magically shrink to fill that hour.

This can be taken to the extreme. There is a corollary to Parkinson’s law which says…

“If you wait until the last minute, it only takes a minute to do”.

So all you procrastinators are on to something. Waiting to the last minute is a good strategy to make yourself more efficient!

“Don’t fight Parkinson’s Law, start using it to your advantage.”

Using Parkinson’s Law To Your Advantage

So how do you use Parkinson’s Law to your advantage?

One way is to make money “less available” so that your spending automatically shrinks to make it fit. This is an easy budgeting trick that can make budgeting so much easier.

The best way to use Parkinson’s Law to your advantage is to use an anti-budget or reverse budget.

With an anti-budget you pay yourself first and leave the rest for spending. You don’t track/manage individual spending categories, you remove a certain amount from each paycheck and then you just let Parkinson’s Law help you manage the rest. Your spending will shrink to fit whatever money is left over.

The best thing about an anti-budget is that it can be easily automated. You can set up an automatic transfer to move money into a savings account each time you get paid. Every time your paycheck rolls into your bank account a portion gets removed automatically. Out of sight, out of mind.

Rather than saving whatever is left over at the end of the month you do the reverse. You save money first, cover any fixed expenses, and spend whatever is left over. You use Parkinson’s Law in reverse, you force your spending to shrink to fit the money available.

Don’t Fight Parkinson’s Law

Parkinson’s Law is a natural phenomenon, one I think we’ve all experienced, even if we didn’t know exactly what was happening. Don’t fight nature, use it to your advantage. Try the anti-budget.

If you’ve been struggling with a traditional budget, if you find it too time consuming, too detailed, too restrictive, then maybe you need to try the anti-budget.

Don’t fight Parkinson’s Law, start using it to your advantage.

Owen Winkelmolen

Financial planner, personal finance geek and founder of PlanEasy.

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1 Comment

  1. GYM

    This is totally what I do! Pay myself first. It really helps curb the spending so you don’t feel ‘rich’!

    Reply

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