Parkinson's law: why most people remain poor

Parkinson's law (satirically formulated a law based on the experience of the British government) is one of the most famous and important laws to be used when handling money. It was formulated by English writer C. Northcote Parkinson many years ago, and it explains why most people the end of life remain poor.

 

The principle of the law

 

The law States that no matter how much people earn, they tend to spend everything and even more. Their costs are rising along with their incomes. Many people eventually begin to earn several times more than early in his career. But, anyway, they seem to need every single penny to maintain current lifestyles. No matter how much they earn, it's never enough.





The key to financial success

 

The first conclusion stemming from Parkinson's law is: "Financial independence is caused by disorders of Parkinson's law".

Parkinson's law shows a trap that gets most people. This is the reason of occurrence of debt, worry about money and financial trouble. Only when you develop sufficient willpower to resist the internal urge to spend everything you earn, you begin to accumulate money and thus differ from most people.

 

Reduce your costs

 

The second conclusion from Parkinson's law: "If You allow your expenses to grow slower than your income and you save or invest the difference, after some time you will become financially independent".

The most important thing. I call it "wedge". If you can drive a wedge between your increasing income and increasing cost of maintaining your lifestyle, and then save and invest the difference, you will be able after some time, as investment growth, to improve their financial well-being. Consciously violating Parkinson's law, you eventually will become financially independent.





Practical exercises

 

Here are two methods that you can use to apply this law immediately:

First, imagine that your financial situation close to collapse and you need to take steps to rectify the situation. Reduce all unimportant expenses. Make a budget of your regular, unavoidable expenses occurring throughout the month, and temporarily limit your expenses this amount.

Carefully review every expenditure. Expose question their validity, as if you were analyzing someone else's budget. Look for ways to save money. Aspire to at least a 10 percent reduction in your expenses for the next three months.

Second, resolve to save and invest 50 percent of any increase in your income from any source. Learn to live on 50% of those who remain. Do this throughout your active life. published

 

Author: Brian Tracy (Brian Tracy)

 

Also interesting: How to make a lot of money, getting a pleasure from life

How to think rich: 15 features

 

P. S. And remember, just changing your mind — together we change the world! ©

Source: newgoal.ru/zakon-parkinsona/