Parkinson's Law

Parkinson’s Law is a book written by C. Northcote Parkinson.

R. Nelson Nash took a page in Becoming Your Own Banker to write about lessons learned or “Laws” that one faces daily, which Parkinson wrote of in his book. These laws boil down to human tendencies, which must be overcome for you to be successful practicing the IBC.

The 3 laws Nelson identifies from Parkinson’s book.

Nelson identified 3 laws from Parkinson’s book in Becoming Your Own Banker. They are as follows:

“Work expands so as to fill the time available for its completion”

“A luxury, once enjoyed, becomes necessity”

“Expenses rise to equal income”

Looking at these laws in my own personal life.

All of these laws hold a lot of truth in my life. One simple example that comes top of mind is my first vehicle. I drove a Pontiac 6000 for my first car. It was dented, and the paint was peeling, but it only cost $800.00. It wasn’t anything to brag about, but it gave me the freedom to drive and I could afford it! I drove that car all my high school years, and in college. Once I got a full-time job, it wasn’t long before I bought my first pickup, a Chevy Silverado 1500. That cost me just shy of $14,000.00.

Now, I’ll admit the pickup can do more, if it’s muddy or I need to haul the ATV somewhere, but isn’t it crazy that the car just as effectively as the pickup got me from point A to point B. It cost less than 6% of what the pickup did. I like the pickup more and it looks better (A LOT) but they really accomplish the same job.

The difference was I now had money, and my “expenses rose to equal my income.”

What do all these laws boil down to?

I don’t want to use this blog-giving example after example. What I want to point out is what I see as a common factor between the 3 laws stated above that one must master to beat them.

If you’re thinking about discipline right now, great job!

The IBC requires a lot of discipline. Nelson writes about capitalizing your own banking system in Becoming Your Own Banker, your system being your IBC designed policies. You need to capitalize your system so it can handle all of life’s purchases. This may require adding more capital to your policy for your entire working life and even beyond this point for some.

You will also need to play honest banker. To make your system the best it can be you should use the “smart way,” policy loans, to access your pool of money. This will require paying interest back to the insurance company, but it is the most efficient way to use your system (remember opportunity cost).

If all this isn’t enough, you will need to start more policies in the future, as it is unlikely your first policy will be able to handle all your banking function requirements. This requires more capital, and the startup costs of putting your new policy in force.

Nelson would refer to starting a new policy as starting up a new business, the difference being the life insurance company already has everything you need in place to take control and perform the banking function, you’re just tapping into an existing system. You just have to find the right advisor and right company to fit your needs.

Awareness helps you overcome Parkinson’s Law!

Being aware of Parkinson’s Law has made me a more disciplined performer of the IBC. I know that just because I have the money, doesn’t necessarily mean I can afford something. I am overcoming these “Laws” everyday and am confident if you keep them in mind, you will be successful with the IBC.

When you need more information on the IBC, you can Book an IBC discovery call at your convenience!