Ever wonder why you’re so much more productive the week before a holiday?

Or how you tend to eat more when the fridge is full?

These are both examples of ‘the law of induced demand’.

It was first observed by Cyril Parkinson, a British naval historian and author. He first discussed it in an essay he wrote for the economist in 1955.

‘Parkinson’s Law’ is one of the most powerful forces of human nature.

But it works against most people when it comes to money.

In this article, I’m going to show you how you can harness it to hit your financial goals.

One young couple we showed this to admitted that at first they thought it was a ‘crock of shit’. That ‘this would never work’.

That was before they used it to smash through a savings plateau they’d been stuck at for years. Then fund every financial goal they’d set in an 18 month period.

What do they say now?

“This will change your life”.

You can use your primitive programming to make financial progress natural. And dare I say it, fun.

In the same way it’s easier to swim ‘with the tide’, it’s alot easier to work WITH the way you’re wired.

Let me show you how…

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Parkinson’s productivity secret

If you’re going to use Parkinson’s law, you need to know how it works.

Here’s how the man himself explained it:

“Work expands so as to fill the time allotted to it”.

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Let’s take this theory and see how it works in real life…

If you know you have a week to complete a task, it tends to take a week. Whereas if you have one day, somehow you’ll get it done in a day.

I’m using Parkinson’s law right now to write this article.

It’s 6am, and I’m road tripping up the east coast on holidays with my family. I have 45 minutes before we need to be packing to leave.

I’m doing it now, because I know this draft will be completed in 45 minutes.

If there was no hard stop, it might take me a month.

I’d get all perfectionistic about it. I’d hesitate, question. Add, edit review and recycle my ideas endlessly.

This is why it’s been said that ‘if you want something done, give it to a busy person’.

The busy person doesn’t have the time to let the task expand.

Here’s the brilliant insight behind this idea:

Simply by regulating supply, you can moderate demand.

This is why you’re most productive the week before a holiday. You only have one week to get on top of things.

So you get more done per unit of time.

It’s also why you eat more when the fridge is full.

The more there is, the ‘hungrier’ you seem to be.

You eat more food each sitting, and you eat more often.

Hopefully, you’re beginning to see how this works.

But how does it work with money?

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Induced demand and impulsive spending

Just as work expands to fill the time allotted to it, your spending expands to consume the money available for it.

If you earn and spend out of the one bank account, you’ll have big spikes in ‘supply’, which leads to big spikes in demand.

This means you’ll tend to overspend in the week or so after your income hits your account.

It feels good to not worry about whether or not you have the money. You know you do.

But that leads to a big issue as the month progresses…

Generally it hits you in the second or third week.

You have more month at the end of your money, than money at the end of your month.

This boom bust cycle is a rollercoaster of emotions. And it creates a sense of being ‘out of control’ with money.

Over time, this cycle erodes confidence and creates a kind of ‘learned helplessness’ with money.

And it’s because Parkinson’s law is working against you.

The way your money is structured puts your desires ahead of your dreams. You might have fun, but you'll also feel like you're failing when it comes to your finances.

And that's because you won’t feel or see any real progress.

So, how can you get this powerful law on your side?

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How to hit your goals with Parkinson's law

Here's how you can harness the power of Parkinson’s law:

Moderate the supply of money within a predetermined time frame.

The first step is to seperate your money.

You need accounts that ‘keep’ your money as you save it. We call these ‘goal accounts’.

And you need accounts that ‘siphon’ your money as you spend it. These are spending accounts'

There are two types of spending accounts:

Essentials. This account is for expenses that you must be paid for to ‘keep the lights on’. For example, mortgage, rent, electrical bills, fuel etc.

Lifestyle. These accounts are for discretionary spending. Think coffee, dinner dates, social outings etc. . If you’re in a relationship, we recommend three lifestyle accounts. One for each person, and one joint account.

Now that we understand how to structure money, we can use time to get Parkinson’s law on our side.

The key here is to allocate money forward to the month ahead, then track what we call ‘burndown’ in realtime.

Let me show you…

You can see here how essentials and lifestyle accounts are being drawn down. And you see this pattern in relation to the month.

This is because decisions were made about how much to spend within each account.

But not for the average month, for the actual month.

As the month progresses, you can see how spending appears to adjust to hit zero by the end of the month.

This is Parkinson’s law in action.

In the same way I know I have 45 minutes to complete this draft, it’s clear I have one month to spend around 8k.

More specifically, 7k on essentials, and 1k on lifestyle.

The way time and money are ‘linked’ here matters.

Knowing how much you have to spend is not enough.

You must know ‘how much’ for ‘how long’.

If you do this, you’ll notice that more often than not, your spending reflects your intent, not your impulses.

Like an automatic car knows when and how to shift gears, your spending will adjust to accomodate clear constraints.

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What it does for you when it works

Knowing your ‘burndown’ is how you get Parkinson’s law on your side. And it’s one example of what we call ‘monitoring vitals’.

Your economic vitals are key money metrics. Knowing them is how you can course correct toward your goals.

As with health, monitoring your vitals is how you achieve ‘vitality’.

It helps you answer key questions, such as:

What are we earning?

What have we earned year to date?

How are we spending?

Where is our money going?

What is our most variable spending category?

What are we saving month by month?

What have we saved year to date?

When will we be able to fund each of our goals?

Are we ahead or behind on our plan for the year? By how much?

How has our position changed? Where will it likely be in 6 months?

When you know this, you can make informed financial decisions.

The more aware you are of your money, the less likely you'll overspend.

Which means more money saved for your lifestyle goals.

And more money invested for your financial goals.

This helps you fund your goals faster. Because it aligns your efforts to the outcomes you want. And it helps you stay consistent so that those efforts can compound.

You’re not guessing or hoping you’ll achieve your goals. You're managing your money to ensure you do.

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How to put this insight to work

Ok, so now you know how Parkinson’s law works. And how it works for or against you when it comes to your spending.

I’ve also shown you how to make it work for you: by tracking ‘burndown’, one of our economic vitals.

There’s one more thing I want to say…

Like any habit, the secret is making it easy, fast and fun.

This is why we’ve built our own tech.

We’ve seen how powerful these ideas are when applied. And tools are how information is converted to action and outcomes.

Our tool is built for the money mapping method.

And it’s designed to help you track burndown and other economic vitals in pursuit of your goals.

If you’d like to see how we use this pioneering tech in our program, save your spot in our next live webinar.

Burndown is one part of the practice. In the webinar you’ll discover the five key skills of the money mapping method.

And I’ll show you how we train folks to master these skills using our tool.

To save your spot, click here.

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