Spending Wisely

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Kenneth Ewoigbe
Motivational Speaker, Business Entrepreneur/Developer,
Webmaster, Internet Entrepreneur, Manpower Developer,
Human Capacity Developer,
Systems Consultant, Content Writer,
Fashion/Car Enthusiast

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Parkinson's Law

In 1955 - C. Northcote Parkinson, made an observation which today is known as Parkinson's Law and I rephrase in a simple, easy to understand way: "Your expenses will always rise to meet your income"

Unfortunately, we have a basic instinct to obey this law absolutely. Here is how it works. You earn 30,000 per month and you are happy and comfortable. You exist within the limits of 30,000.

Suddenly, there is a raise and you are booted up to 55,000 a month. Within a week, the scales fall off your eyes and you realize that you should have more than one shoe.You suddenly realize that drinking water directly from the well or tap isn't so in vogue and you start buying 'bottled water'. You suddenly discover that you should add beverages to the menu.

Then you need a gas cooker, hot plate burner and a microwave oven which then needs a generator to power it if you live in Nigeria-which means changing from small to a bigger one, and then you need to spend money to buy more fuel and pay for maintenance cost. You need a tab and a good phone to match the status of the job promotion too!

Get the drift?

And then a jump from 30,000 to 55,000 which you were ecstatic about 30 days earlier now looks like a curse because you are now spending more than you used to and the situation is worse than ever before.

Because your expenses has risen to match your income and exceeded it, you start borrowing and go into debt, and this is where the trouble really starts.

What happened?

You obeyed Parkinson's law to the later.

In truth, sometimes it makes sense to borrow. A lot of the time however, it doesn't.

In my opinion, the total debt you are paying in a month should not be more than 25-30% of your monthly income. If you are currently doing more than this in debt (especially towards servicing bad-debt), sit down and check it again.

It is very easy to spend more than you make. Very, very easy. In fact, no matter how much you earn, your expenses will somehow blow up to match your income and then exceed it, which leads to a state of deficit. That is why you need to consciously DISOBEY Parkinson's law! And for good.

Till I write to you again tomorrow, I say unto you my good friend "have a great day!"

If this blog is a plus to you, and you think it can do good to others, share! share!! share!!! Or you can copy the link and send to as many as you want.

A Good Time To Borrow

Good-debt vs Bad-debt, Intangible vs Tangible Investment

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Parkinson's Law 1955 - C. Northcote Parkinson, made an observation which today is known as Parkinson's Law and I rephrase in a simple, easy to understand way: "Your expenses will always rise to meet your income"

Unfortunately, we have a basic instinct to obey this law absolutely. Here is how it works. You earn 30,000 per month and you are happy and comfortable. You exist within the limits of 30,000.

Suddenly, there is a raise and you are booted up to 55,000 a month. Within a week, the scales fall off your eyes and you realize that you should have more than one shoe.You suddenly realize that drinking water directly from the well or tap isn't so in vogue and you start buying 'bottled water'. You suddenly discover that you should add beverages to the menu.

Then you need a gas cooker, hot plate burner and a microwave oven which then needs a generator to power it if you live in Nigeria-which means changing from small to a bigger one, and then you need to spend money to buy more fuel and pay for maintenance cost. You need a tab and a good phone to match the status of the job promotion too!

Get the drift?

And then a jump from 30,000 to 55,000 which you were ecstatic about 30 days earlier now looks like a curse because you are now spending more than you used to and the situation is worse than ever before.

Because your expenses has risen to match your income and exceeded it, you start borrowing and go into debt, and this is where the trouble really starts.

What happened?

You obeyed Parkinson's law to the later.

In truth, sometimes it makes sense to borrow. A lot of the time however, it doesn't.

In my opinion, the total debt you are paying in a month should not be more than 25-30% of your monthly income. If you are currently doing more than this in debt (especially towards servicing bad-debt), sit down and check it again.

It is very easy to spend more than you make. Very, very easy. In fact, no matter how much you earn, your expenses will somehow blow up to match your income and then exceed it, which leads to a state of deficit. That is why you need to consciously DISOBEY Parkinson's law! And for good.

Till I write to you again tomorrow, I say unto you my good friend "have a great day!

If this blog is a plus to you, and you think it can do good to others, share! share!! share!!! Or you can copy the link and send to as many as you want.