Last week, we took a look at Parkinson’s Law, which states that “work expands so as to fill the time available for its completion.” So it makes perfect sense that last week’s post was all about time-saving techniques and maximizing your productivity.

But have you thought about how Parkinson’s Law applies to your money?

Maybe we could rewrite it like this: “Your lifestyle expenses increase so as to use up the income available.”

I’m talking here about the dreaded “lifestyle creep!” Here’s what I mean:

Let’s say you get a bump in your income. Maybe you get a juicy raise, land a sweet bonus, or start a profitable side business.

Then you upgrade your lifestyle! You spring for a nice vacation, move to a pricier home, start buying fancier clothes, or begin eating out more.

At the end of the day, that extra income has been completely consumed by the new expenses you’ve created for yourself. Your lifestyle expenses have increased and used up all of the available income you have.

So how can your understanding of this twist on Parkinson’s Law make you a money-saving whiz? 

Keep the big picture in mind.

The secret is in living not just within your means but below your means. Ensuring that you always have some surplus money — money coming in that’s not needed to cover your expenses and that you can put toward saving.

After all, managing your money involves naming your financial priorities and keeping them in mind as you make money choices. So what’s important to you?

If you had an extra $10,000 handed to you today, what would you do with it?

• Does your emergency fund need some beefing up?
• Does your retirement account need some extra attention?
• Do you have overdue home repairs?
• Are you hoping to buy a house soon?

Now, $10,000 sounds like some awesome fun money! Your inner child might be raring to blow it all on fun and toys instead of being boring and responsible. Thinking of the big picture certainly sounds like a huge drag. But . . .

• Rounding out your emergency fund will give you priceless peace of mind.
• Saving for retirement now can give you incredible financial growth that you enjoy later in life.
• Fixing your home problems soon could save you the hassle of crazy expensive bills down the line (and increase your property value to boot).
• Handing over that down payment check on closing day is a true moment of pride.

So what’s important to you? And how important is it? Put your money where your priorities are.

Anticipate additional income.

Except in rare cases — an unexpected inheritance, a big win from an office pool, or a surprise tax refund — you know when more money is coming your way. So get ready for it!

Before you get giddy from seeing a nice bump in your savings account balance, come up with a plan for exactly how you’ll spend your money.

You could take that bonus of yours, use a bit for a nice dinner out with your spouse, and then tuck the rest into special savings accounts for your golden years, the business you plan to start, that patio you’ve always wanted, or anything!

The important thing is to plan in advance.

Create a savings routine and automate your savings.

Credit card cash back, tax refunds, annual bonuses, birthday checks — these are all great examples of “extra” income that may come your way. And holding on to that cash instead of blowing it may just be a matter of moving it out of your line of sight.

Enter the magic of electronic banking.

If you’ve just deposited a $100 birthday check from your grandmother, set up a transfer a week from now (after the check clears) to whisk that money out of your checking account and into a special savings account for some big goal.

Know that your company bonus of $5000 is landing in your account on Monday? Set up a transfer that’ll shimmy that amount over to your special account on Tuesday.

You’ll never miss it, and you’ll be able to build up that out-of-the way account amazingly quickly.

Stay a saver at heart.

One of the best pieces of advice I read after my financially starved years of graduate school was to live like you were a graduate student for as long as possible.

During those years I had survived on a teeny income procured from two jobs I worked while going to school full time. I had a small apartment, unremarkable furniture, and a car whose maintenance work usually involved a little duct tape and a lot of prayer as I rolled over the Blue Ridge Mountains. (I wouldn’t recommend my car maintenance plan to anyone!)

At the same time, I was forced to get creative in using my meager budget for things like Christmas gifts and entertainment! I did plenty of holiday-time comparison shopping and a lot of (free!) hiking in those beautiful mountains.

While I’m happy nowadays to have enough money to spend on actual car repairs and full-priced movie tickets, I try to remember the lessons I learned out of necessity back in the day:

• Keep on looking for great deals, comparison shopping, and tracking down discounts and coupons!
• Hang on to your big-ticket items — your car, your home, your furniture, your special-occasion clothes — for as long as possible. And take excellent care of them in order to extend their usefulness.
• Get creative in how you spend your fun money! There are so many amazing activities you can do for free or nearly free.

So take a good look at your budget! What have you got in there that matches up with your priorities? And what’s just taking up space in your finances?

Share what you discover in the comments!

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