Create Small Choices to Feel in Control of Your Money Over Time
It can be difficult to feel in control when your financial situation sucks, but control is absolutely essential to getting your finances in order . Especially when you feel defeated, it is important to create an inner locus of control – the belief that your actions can affect your destiny. Here’s how to work with it.
Charles Duhigg talks about this concept in his book Smarter, Faster, Better (we reviewed this book here ). As a money writer, I couldn’t help but transfer his concepts to personal finance. The idea of an internal and external locus of control is the essence of money management.
Duhigg explains that people with an external locus of control tend to consider or blame their success or failure as luck. On the other hand, people with an inner locus of control believe that their hard work pays off and take responsibility for their failures. The problem is, when life throws you a bunch of crap, it’s incredibly easy to develop an outer locus of control.
Your bills are overdue, your car breaks down, and your employer is cutting your hours. After a while, you begin to feel that there is nothing you can do to compensate for your failure. Most of us have been there and you feel weak and powerless. In an interview, I asked Duhigg how to fix this. How can you develop a sense of control when you feel completely out of control of your situation? He explained that it all comes down to choice :
Carol the Fool, a psychologist, she says – and research backs it up – if a child does really well on the exam, you shouldn’t say, “You must be really smart,” because being smart is not something the child thinks. what they control. Instead, you should say something like, “You must have worked very hard.”
… You explain to people how their choice, how their actions lead to such positive results. Then you put them in situations where they really need to make controlled choices, and in doing so, they learn.
We’ve already discussed this method when it comes to motivation : Create choices for yourself, and then link your actions to a larger goal. So, in general terms, the solution is to use the power of choice in order to feel more in control. One simple choice won’t magically fix everything, but that’s not the idea. The idea is that gradually making decisions will help you develop a sense of control. Here are some examples of how you can apply this concept to your finances:
- Decide if you should use the snowball method or the stack method to pay off debt
- Decide if you will cut your entertainment or restaurant spending over the course of the month to save money.
- Decide whether to open Roth or a traditional IRA.
- Decide which monetary book you will read next : I will teach you to be rich, or your money, or your life.
Heck, your choice can be as simple as deciding which day of the week you sit down to see your budget.
When it comes to managing your money, even a little sense of control can make an impact, especially over time. In other words, it helps you focus less on what you can’t control and more on what you can. It’s hard to do this when you feel defeated, but that’s when it’s most important.
You can learn more about the concept of an “internal locus of control” at the link below.
The Power of an Internal Locus of Control | thewildwong