Cyril Parkinson first wrote “Parkinson’s Law” in 1955 to define the nature of government bureaucracies to expand and never get smaller1. It could be generally stated as the following. “The demand upon a resource tends to expand to match the supply of the resource” or as what is helpful for our discussion about budgeting and sometimes now known as Parkinson’s second law, “expenditures rise to meet income”. Simply stated…as your income rises so will your expenditures naturally rise to distribute that income. We know this is true. Unless a budget is developed to control the spending and provide for savings and investing, the money will disappear. Savings also eliminates the feeling that your finances are out of control and brings a sense of freedom and dominion.
A few years ago I was teaching in a financial seminar. Dave Yarnes, a businessman from Charlotte, South Carolina, was also speaking at this conference on the subject of wealth accumulation. Dave is the owner of multiple businesses and is involved in many projects helping the poor in developing nations. He stated an interesting concept about wealth accumulation. He and his wife decided what standard of living they would live at independent of how their income would increase. He feels this is one reason the Lord has blessed them with considerable resources to extend the kingdom of God. This is another reason to budget and plan how much it costs you to live.
Personally, I want to know how much I gave away last year so that I can continue to challenge myself in giving. I want to know how much I spent on food to feed my family last year so I can plan to feed them this year. I want to know how much I am spending on vehicle maintenance because this helps me decide when it is time to get a new car that takes less maintenance. I want to know how much I am spending on interest each year because interest can sometimes be the biggest killer of giving, savings and investing. A budget helps me do all of this.