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Ever wonder how you earn more money than you did, say, 10 years ago, but somehow you are in the same financial boat as always?
Expenses always seem to expand to consume all money available, making it seemingly impossible to get ahead.
This is Parkinson’s law at work.
More commonly, this “law” is described as the tendency for work to expand to fill the time allotted. If you have all day, you’ll take all day. If you have an hour, you’ll take an hour.
But the logic applies to any resource, reflecting the tendency of the demand for any resource to expand to match its supply.
In other words, if it exists, we will want it.
If we have it, we will consume it.
This goes for our money and all the consumable stuff our money buys.
It’s why we must be intentional about how we spend and save, because the default is always to spend and get more.
Even if the unit price at Costco is similar to Aldi, it doesn’t mean you still won’t spend more buying groceries at Costco overall.
For example, if you have a 2 lb container of cashews, instead of a smaller 1 lb container, in the pantry, you’ll likely just eat twice as much in the same amount of time. The constraint of smaller containers leads to lower consumption.
Thus, buying in bulk might be less cost per unit, but it rarely ends up as less overall, unless you’re very intentional about how that resource is allocated. For example, you could stock up the pantry with boxes of snacks or, instead, keep them stored away, only putting one box out in the pantry per week.
Likewise, we think about the price of gas when we’re filling up, but once the tank is full, we don’t often think about the cost of using that gas as we make choices about driving here and there. But this, of course, is nonsensical.
Generations before us understood this more viscerally. I save foil the same way my grandfather did and think of him every time I salvage a piece from the top of a casserole. Born in the 1930s, his family culture was no doubt influenced by the scarcity of the Great Depression. During World War II, rationing to conserve supplies and raw materials for the war effort touched every household.
By comparison, our taste of shortages during the pandemic was trivial. So we use miles of aluminum foil and grab snack bags by the handful without a second thought.
The problem is when we do this while wondering where all of our money goes. Why we’re no better off than we were a decade ago. The money leaks out in so many directions simply buying the daily “necessities,” that we just can’t see it.
It’s the invisible, expansive nature of Parkinson’s Law.
So, without becoming neurotic about using aluminum foil, do think twice about your consumption.
Think twice about where and why all your income is consumed by simple life maintenance.
Think twice about how you use up your resources, not just what they cost when you buy them.
And especially the next time you shop at Costco, beware of Parkinson’s law at work.
When riches take the place of poverty, the change is usually brought about through well-conceived and carefully executed plans. Poverty needs no plan.
Napoleon Hill in Think and Grow Rich
It’s not the man who has too little, but the man who craves more, that is poor.
Seneca
I hope you enjoyed this edition of Under 2, an email series designed to share quick bites of wisdom to empower your financial journey (while keeping it short). Be sure to sign-up below to get these messages in your inbox.
All for now,
Lindsey