Have you ever wondered why your salary raise ended up not being enough, despite all your permutations and projections on how you will save more, invest more, etcetera?
So there is this law called the Parkinson's Law I learnt about a long time back, it states that expenses will always increase in proportion to income growth. If you do not know and understand this law and how it works, you will keep blaming yourself and innocent people for your financial struggles.
I have met people who were earning a certain amount, and they were doing relatively well, financially. Their expenses were adequately accommodated by their income, with little borrowings here and there to cover for momentary shortfalls, when they arose.
I remember the ecstasy on their faces when they had their remunerations reviewed upwards, it was as though "finally, I can now save and start that dream business I have always fantasized about". I will not forget in a hurry the shock, disappointment and anger on their faces while they narrated to me how they had gotten into more debts than they were at their previous levels of income. In their own words "it is as though this extra income, came with its attendant extra expenses". In my response to them, I asked if they had heard about Parkinson's Law, and the bewildering look on their faces said it all, as well as set the coordinates for my discussions with them.
If you are not deliberate about curbing or disciplining your expenses, you will always end up in the same state, if not worse than before the salary raise arrived. The truth is, with an extra income, there is always something to spend on. This has nothing to do with village people, it is just the reality of financing.
So, be intentional about your finances, that is the only way to remain afloat.
