“A man who conquers himself is greater than one who conquers a thousand men in battle”.
As of late, I have come across the topic of locus of control a couple times. During a strategic planning meeting at work, the Vice President of HR mentioned that we need leaders who have an internal locus of control as part of the committee that will be implementing our new strategic plan for our health care centers to comply with The Triple Aim. I have also recently come across the topic at a leadership training seminar at Binghamton University.
So, what is Locus of Control and how is it relevant to your personal finances?
Locus of Control is a concept by Julian Rotter that became popular in the 1960’s. It is based on the degree of how much power people have over situations in their lives. People who have an internal locus of control think that they can influence events in their lives. People who have an external locus of control blame others or outside forces for everything that happens to them.
People who have an internal locus of control tend to be self-aware. They are empathic towards others. They are good at self-regulating their emotions, thoughts, and perceptions. People who have an internal locus of control normally are good at delaying gratification.
Those who have an external locus of control are more likely to be the bellwether. They are a good indicator of trends or predictions of a group. They value feedback, believe in fairness, and focus on the actions of others.
Locus of Control can play a role in how successful you are in the long-term. If you have an internal locus of control you are more likely to believe that it is up to you to take charge of your life and take the required actions to succeed. For those who fall into the external locus of control group, it does not mean that you will not be successful, it just means that you put more stock into luck vs will.
A person with an internal locus of control is very likely to be committed to saving money. They feel the need to be self-reliant. They want to make sure that they have enough resources to take care of any situation that might occur.
A person who has an external locus of control is less likely to worry about saving money. They are likely to feel that the system is rigged and saving is impossible because everything is so expensive nowadays. Even if they tried to save more, they believe that something would happen and they would have to spend the money anyway.
Those who have an internal locus of control are less likely to have excessive debt. That is because they can display more control over their financial situations. It is ultimately their responsibility to manage their financial situation and do not want to error and fall behind to a creditor.
For those who have an external locus of control, debt is an easy solution to a financial situation. Since they do not have enough saved or feel that they are not paid enough, they can justify the debt. They will fall into the mindset of “it will get paid” or “hopefully, I will come across a windfall to pay it off”.
People who have an internal locus of control are more likely to be investors. Since they feel like they have the mastery over their life, they are going to invest their money to improve their financial situation. They are willing to invest in a business, education, or stocks to put themselves in a better financial situation.
People who fall into the external locus of control group do not tend to be investors. They are less likely to invest is stocks because they are too risky. If they do invest and lose money, they feel that it was fate and they should not be putting their money at risk in the first place.
Employees who have an internal locus of control start their career by being prepared for the job interview. They assume responsibility for failures and look for ways to improve their performance. They credit their success on effort and preparation.
Employees who have an external locus of control feel that jobs are awarded to people based on politics or nepotism. When something goes wrong, they do not assume responsibility, but rather blame others. If there is a positive outcome, it is viewed as just being lucky.
Do you have a high Internal or External Locus of Control?
Are you curious to see if you have a strong internal or external locus of control? Please see this article on the locus of control at mindtool.com. It has a 22-answer test to determine if you have an internal or external locus of control.
What can be done about the Locus of Control
In my K.I.S.S. approach to Financial Independence, I have stated that this blog is about being positive and honest with yourself.
With that being written, what can you do if you want to shift your external locus of control more towards the center?
You can start by being more mindful. Start by being more aware of how you are feeling and responding to situations. For example, if someone at work gets a promotion and you feel the promotion was awarded due to favoritism, stop and identify that thought as being linked to your external locus of control. Change the narrative in your mind to “they worked hard for the promotion and if I work hard, positive events will come to pass for me too”.
Take a mental inventory of each situation you face. How are you responding to situations? The solution is based on adjusting how you think about external situations.
If you find that you have a high external locus of control, stop being a victim to this state of mind. Take charge of your life and destiny by changing how you are mentally framing situations that occur in your life. If you do, great things are sure to happen.
Changing your locus of control is not easy. It is, however, possible if you are willing to be vigilant. Take a personal inventory every day and follow it up with positive action.