First articulated by Cyril Northcote Parkinson in the early part of the 20th Century, Parkinsonís Law states that "the demand upon a resource tends to expand to match the supply of the resource*." This concept has been applied to numerous areas of life, from politics to computer data, to point out the fact that the more we have of something, the more we tend to use. In financial terms, Parkinsonís Law can be summed up in 4 simple words, ďMake more; spend more.Ē
One of the biggest mistakes that new & aspiring entrepreneurs make is not adequately investing in their businesses. Whether itís a new business owner skimming a little too much of the profits for personal enjoyment, or an employee wasting a raise or Christmas bonus on upgrades to their material possessions, most of us have the tendency of falling prey to Parkinsonís law. In fact, studies show that through the availability of credit, Americanís have in essence re-written Parkinsonís Law. We donít only let our expenses rise proportionately with our income; we actually let them outpace us by spending an astounding 114% of what we actually earn!
Unfortunately this is another area of life where the church at large has followed right in step with the world, and its results are tragic. This fiscal unfitness that is so prevalent in our pews paralyzes us from taking action on our God-given visions and prevents us from starting or expanding our entrepreneurial efforts. The body of Christ must make a change, and it starts by breaking the lawÖ
The key to success in your business and finances is to make a concerted effort to violate Parkinsonís Law. I tell my students all the time that there are only 2 ways to make room in your budget, and that is to make more or spend less. When you receive a raise or bonus, or your business has a good month, you have to resist the temptation of allowing your expenses to expand, filling up this new found room in your budget. This extra money is in fact a seed, that when sown into a God-directed financial endeavor, can produce a harvest of prosperity and blessing for you and your family.
Thank you, I've felt this but have never seen it explained so clearly and concisely that I would be able to communicate it to others. This issue is beyond simply an exercise in discipline for modern Americans, it is possibly the single most paralyzing force in Christianity today aside from lack of scriptural understanding. This topic always reminds me of Haggai 1:3-6
3 Then the word of the LORD came through the prophet Haggai: 4 "Is it a time for you yourselves to be living in your paneled houses, while this house remains a ruin?"
5 Now this is what the LORD Almighty says: "Give careful thought to your ways. 6 You have planted much, but have harvested little. You eat, but never have enough. You drink, but never have your fill. You put on clothes, but are not warm. You earn wages, only to put them in a purse with holes in it."