Paying Yourself First and Parkinson’s Law

Many personal finance books like Money: Master the Game and Rich Dad Poor Dad recommend paying yourself first. This means once you receive your paycheck, you invest a portion of your money first before paying any of your other bills. This ensures the money you need to set aside to invest is prioritized, rather than the remainder being left for last. If you pay yourself last, you’d often end up with little or nothing remaining.

Your budget will expand to fit the amount of money you’ve allocated to it. This reminds me of Parkinson’s Law, which states that a task will expand to fit the time you’ve allocated to it. So if you’ve allocated 4 hours to finish a task, you’ll get that task done in 4 hours. If you allocate 20 minutes to complete that task, you’ll take only 20 minutes to complete that very same task.

The solution to this is a concept called Time Boxing, which involves setting a time limit (often with an actual timer) to complete the task. This ensures you complete the task in a timely way.

I think paying yourself first follows the same psychology as Time Boxing. By paying yourself first, you are forcing the remainder of your expenses to fit the budget allowed, rather than the other way around.