Why Your Money Keeps Disappearing (Parkinson’s Law)

Have you ever looked at your bank account and asked yourself “Oh my word, where did my money go?” Have you ever been given a project with a deadline, then used that whole time to complete the project? These two circumstances are connected by a phenomenon called Parkinson’s Law and it applies to anything from time management to personal finance. 

Parkinson’s Law on Campus

When I was in college, I remember approaching the final for my class of Thermodynamics. Our professor told us we would have 1 hour 15 minutes to complete our test. The test started, and I began pounding out the problems.  

I was pacing myself well for the amount of time given, ensuring that I got to each problem before we had to turn in our tests. 

5 more minutes, 4 more minutes, 3 more minutes,

Not a perfect test but I felt like I would do okay. However, 1 hour and 15 minutes came and went and our professor didn’t make us turn them in. He just kept letting us work. In fact, for the next 30 minutes, he let us continue working on our tests. So I went back to problems I wasn’t so sure about, checking other answers until we had to turn them in. 

This is a real life example of Parkinson’s law. 

Let’s Get a Definition, Please

Indirectly started by Cyril Parkinson, a British author from the 1950’s, Parkinson’s law is defined as this:

If we go back to my example, you can see exactly how it’s true. I was originally given an hour and 15 minutes to complete my final for Thermodynamics. But, when given an extra 30 minutes, I filled that time with reworking problems and checking my test.

And this applies directly to your personal finances. Except, we’ll start a new law for this. We’ll call it Parkinson’s Modified Law for Personal Finance

The Results

This is what causes you wonder who’s been draining your bank account when you aren’t looking. Spending filled the space where your budget did not. If money isn’t designated for specific uses, it will be used but maybe not for the things you’d like them to be used for when you look back. 

To be clear, Parkinson’s modified law of personal finance doesn’t apply to everyone the same. Some people are just natural savers and do not need to worry about spending money unnecessarily. 

But for the vast majority of people, I believe that Parkinson’s law will kick in when they are least expecting it. And by budgeting, it will help control the law by minimizing unnecessary spending. 

I really like this quote from John Maxwell, the well known leadership teacher: 

“A budget is telling your money where to go instead of wondering where it went” 

John C Maxwell

If you’re tired of wondering where your money is going, start up a budget. It can be simple. It doesn’t have to be hard and it doesn’t have to be perfect. And I show you exactly how to do set up your first budget right here in this video.

Need Help Starting a Budget?

Are you overwhelmed by debt and feel like there’s no way out? Feeling intimidated by budgeting?

I can help! I’m a financial coach trained by Ramsey Solutions to guide people in their financial lives. Set up a free consultation below and I’ll listen to your situation and guide you on the right steps forward. There’s no commitment.

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