Locus of Control

“A man who conquers himself is greater than one who conquers a thousand men in battle”.

– Buddha

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 in spite of having an abundance mindset.

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.

Saving Money

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 savers.  Since they feel like they have the mastery over their life, they are going to invest their money to improve their financial situation and work towards reaching financial independence.  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 in 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  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.

14 thoughts on “Locus of Control

  1. Kris

    Never heard of this term before. I used to have external locus of control back when i was coming out college but throughout my 30s it has shifted to mainly internal. I blame myself more than others, think more objectively, and better control of my finances.

  2. The Luxe Strategist

    I actually was JUST reading about this. I’m reading a productivity book called “Smarter, Better, Faster” by Charles Duhigg. He writes about honing your locus of control in the marines, and also how seniors who have it tend to be happier and live longer. For me, I was left home alone with my sister a lot and I think all those times I had to make my own decisions has really helped me gain confidence that I’m in control of my own destiny.


    Good post, and I agree that most of us in the FIRE community have an internal locus of control.

    I think I got that early in my life (my school beat it into me), and I have tried to follow it throughout. Occasionally I will whine “woe is me” and assume I can’t fix something, but then I get to work at it and find that I can do something about it.

    Its been a great help throughout my life.

    Keep up the good writing!

    Mr. 39 months

    1. thefinancialjourneyman Post author

      Thanks for the comment and kind words.

      I agree that my early schooling has shaped my internal locus of control.

      Sometimes it takes time for us to find the hope that we have power in most situations.

  4. Tim

    Great article and great points. I feel similar, that when I was younger I was using internal locus but have shifted probably 8 or 10 years ago. I find myself analyzing situations more also and thinking before reacting.

    1. Tim

      Correction, I started external and have shifted to internal. I think a lot was due to experiences and the need for a change also. I was viewed differently at my jobs when I was external, not necessarily bad, but not positive to be honest. Once I became more internal, perception of me changed for the better.

  5. Mustard Seed Money

    I think too often I try to blame others and become angry at the situation that I’m in when it’s clearly my fault that things have turned out this way. I’m working on taking responsibility for things that I actually control but I have to admit it’s much easier blaming someone else.

    1. thefinancialjourneyman Post author

      Thanks for the comment.

      It is easy to blame others.

      I think everyone does it to some extent.

      For me, I just try to make progress and take an inventory of how I am responding to situations that disturb me.

  6. Karl Steiner

    Ultimately, the Buddha would say that control is just an illusion. So locus of control is a useful concept, but only if we don’t take it too seriously. Nice article!


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