It’s hard to feel in control when your financial situation sucks, but control is absolutely crucial in getting your finances in order. Especially when you feel defeated, it’s important to build an internal locus of control—a belief that your actions can affect your destiny. Here’s how to work on it.


Charles Duhigg talks about this concept in his book Smarter Faster Better (we reviewed the book here). As a money writer, I couldn’t help but translate his concepts to personal finance. The idea of an internal vs. external locus of control is what money management is all about.


Duhigg explains that people with an external locus of control tend to credit or blame their successes or failures on luck. People with an internal locus of control, on the other hand, believe that their hard work can pay off, and they take responsibility for their failures. The problem is, when life throws a heap of crap your way, it’s incredibly easy to develop an external locus of control.

Your bills are overdue, your car breaks down, and your employer cuts back your hours. After a while of this, you start to feel like there’s nothing you can do to offset your bad luck. Most of us have been there, and you feel weak and powerless. In an interview, I asked Duhigg how to fix this. How do you develop a sense of control when you feel completely out of control of your situation? He explained that it comes down to making choices:

Carol Durack, a psychologist, what she says is – and, studies back her up on this – if a kid does really well on an exam, you shouldn’t say, ‘You must be really smart,’ because being smart is not something that a kid thinks that they control. Instead, you should say things like, ‘You must have worked really hard.’ ...You make clear to people how their choices, how their actions have these positive outcomes. Then you put them into situations where they actually have to make controlled choices and in doing so they learn.


We’ve covered this method before when it comes to motivation: create a choice for yourself, then tie your actions to a larger goal. So in basic terms, the solution is to use choices to feel more in control. One simple choice won’t magically fix everything, but that’s not the idea. The idea is that, gradually, decisions will help you develop a sense of control. Here are a few examples of how you can apply this concept to your finances:


Hell, your choice could be as simple as deciding what day of the week you’ll sit down to look at your budget.

When it comes to managing your money, even a small sense of control can have an impact, especially over time. In other words, it helps to focus less on the things you can’t control and more on the things you can. It’s hard to do that when you feel defeated, but that’s when it’s most important.


You can read more about the concept of an “internal locus of control” at the link below.

The Power of an “Internal Locus of Control | thewildwong

Photo by vaibhav ahuja