I took a cue from what wise people do in times of recession and economic boom, and combined that with my little knowledge of Parkinson Law. Parkinson’s law is the adage that “work expands so as to fill the time available for its completion”. It is sometimes applied to the growth of bureaucracy in an organization.
A layman’s explanation to this law is that as one’s income rises so does the expenses rise, so much quickly to catch-up with one’s income such that the net effect of the income rise is no longer remarkable.
While Parkinson’s Law is famous for comparing it to time, it really applies to most of everything you and I do on a daily basis; income, employee personnel, time, etc. Economists like to call the effect on income and expenses “lifestyle inflation”. It applies to all of us in one way or another.
Even I have been guilty of lifestyle inflation to some degree. When I was in the University (1991 – 1997), I lived off on N19,000 ($55) a year. Now, I spend much more than that amount. Although my income has gone up by countless number of times. It’s still an example of lifestyle inflation, it just isn’t as severe as with a lot of Nigerian, even when you figure in inflation.
Many Nigerians only save on average about 4% of their income (for those who save) regardless of how much they make. So if they make N1,000,000 a year, they’ll save about N40,000. If what they make gets increased to N2,000,000 they’ll only save about N80,000. Yes they are saving twice as much, but they are spending an extra N960,000 not counting taxes!
There is no sound reasoning for this. The only time this should reasonably happen is if one incurred an extra N960,000 in job related expenses for the extra N40,000 in savings. Which would be completely laughable to do. Parkinson’s law strikes again! As your income increased, your expenses have quickly risen to equate your income.
So, I ask myself, “Why don’t I still live the N19,000 lifestyle?” There are a certain number of unavoidable things. While I’m not saying that you need to live like a university student for the rest of your life. I am saying that you need to be aware of lifestyle inflation and keep it to a bare minimum.
Angelina Jolie said something very wise about lifestyle and I quote, “Save one-third, Spend one-third and Give away one-third”. Clearly, she is saying that we can actually live on one-third (1/3) of our income while we save one-third and give away the other one-third to causes like charity – tithe (1/10), helping family members and those in need etc.
I trust that we are all doing well. By that I mean, Parkinson law is not dealing you a big blow.