Parkinson's Law

I recently read an article about Parkinson's Law. I've heard of Parkinson illness but never knew about of Parkinson's Law. Parkinson's Law could be more generalized still as: "The demand upon a resource always expands to match the supply of the resource." This law can be applied to individual too. As an individual's income rises, their costs of living and lifestyle increases to meet their income level.

So now lets have a better understanding. T. Harv Eker, bestselling author of Secrets of the Millionaire Mind, shares with us his view. Poor and most middle-class people believe that the only way to get rich is to earn a lot of money. They believe that only because they've never been there. They don't understand Parkinson's Law, which states, "Expenses will always rise in direct proportion to income."

Here's what's normal in our society. You have a car, you make more money, and you get a better car. You have a house, you make more money, and you get a bigger house. You have clothes, you make more money, and you get nicer clothes. You have holidays, you make more money, and you spend more on holidays. Of course there are a few exceptions to this rule... very few! In general, as income goes up, expenses almost invariably go up too. That's why income alone will never create wealth.

Therefore, if your intention is to be a millionaire or more, you must focus on building your net worth, which is based on much more than just your income. Do you know what's your net worth to the cent?