Hello there readers, today we are talking about locus of control, which comes in two forms, internal locus and external locus, and how developing one or the other might help or hinder your plans for Early Retirement and Financial Independence.

Locus of control is a sciencey-psychology type of theory in which a person is attributed with either an internal or external locus, which basically tells you how they believe things happening in their lives are caused. Either they believe events and outcomes are caused by themselves and their own actions (internal), or conversely they believe that luck, destiny, people more powerful than themselves and perhaps even pixies, fairy dust and other light/dark forces are the real factors that shape their World (external). We’ll dive into both perspectives, but let’s look at how not to perceive your life first, as I find that’s usually the fun way round to do things.


Internal Locus of Control: Develop one, retire early

George Costanza – definitely an external kinda guy


External Locus of Control

Unfortunately, locus of control in all areas of life seems to be gradually being pushed further and further away from individual responsibility. From claims direct et al urging us to sue anything or anyone in the vicinity of the scene of an accident we may be involved in, to politicians creating a nanny state and a nation of whining bitches, the message seems clear:


Quite coincidentally, a person low on the personal responsibility scale makes a perfect credit card customer, for reasons which I am sure do not need explaining. Additionally, the fearful and helpless attitude of a person with an external locus of control will make the perfect consumer; they can’t (or won’t?) think of solutions for themselves, they’ll wait for the boffins at “Corporation X” to build something and then buy it, or wait for someone to tell them what to do and how to live (advertisements). They are more likely to engage in group think, follow the herd, keep up with fashions, and keep the status quo. Is it really any wonder that corporate sponsored TV and newspapers are engendering this attitude in the heaving masses as effectively as they can?

Internal Locus of Control

Now onto the good stuff. A person with an internal locus of control is more likely to be an individual thinker and therefore less likely to succumb to social norms, has more self-confidence, is obviously someone who takes action, or “gets shit done” in laymans terms, and can easily see the benefit of delayed gratification. All of this stuff is solid gold if you want to build up enough savings to retire early. Another seemingly huge benefit is on health, with Internals more likely to not be overweight, and generally healthier, less stressed and with a better job/life satisfaction.

“Sounds good TFS, but how do we develop an internal locus of control?”

I’m thinking that anyone reading this blog already has a pretty decent internal locus, but I’ll play devils advocate and pretend that the reader is currently languishing in external locus land, up to their eyeballs in debt (not their fault of course) and are unhealthy, unhappy, and probably obese with some potentially questionable personal hygeine routines (or lack thereof).

First of all the bad news, studies show that Locus can be dictated somewhat by external factors* such as your parents and upbringing, a lower social class, and other factors such as social unrest in the area you live (unrest = out of control = external locus).

The good news is this: You can change your perspective on life – yes it really is up to you and your amazing human brain! And in case you hadn’t worked it out yet, the opposite loci are both completely self-perpetuating and reinforcing circles.

It follows that if you believe things are in your control, you are more likely to take action and make things happen. Sure, you might fail a few times and make some mistakes, but eventually you will see results and catch a few breaks, which then reinforces this fact that yes, you did all that with all your hard work, you are in control, and there’s no such thing as luck. On the other hand if you just believe that successful people are merely lucky then you have a much greater propensity to not do anything about your situation, you will never catch that break, and your perspective of external locus gets more and more reinforced as time goes by.

Can it really be as simple as picking one or the other perspective on life and believing it with conviction? I personally think yes. Reading* up more on the subject should help too. To make it as easy as possible to either reinforce or re-evaluate your perspective I’ve boiled it down to the two following statements, so all that’s left to do now is to read them both and then pick the one that you think is best. I don’t think it should be too hard:

1. “No matter what I do I won’t be able to get ahead as everyone else has had advantage A or B over my start in life. I might as well sit around and if luck shines on me maybe someday I’ll make it. Or win the lottery. Also I have had health condition X since I was a child and the doctors have never given me a suitable cure for it so what’s the point in trying to live a healthy life. My money situation is totally out of control but everything is too expensive nowadays (damn Economy!). On top of all this I am stressed about it all and this is making my life a misery”

2. “I realise that all of my actions have consequences whether it be directly on my life right now, or in the future, perhaps even years down the line. I will work hard and try to better myself, educate myself and be ready for any opportunities that come my way. I will eat healthily and excercise regurlarly as I know that is the best way to maintain a healthy body, not the latest quick fix from big pharma companies or health food crazes. I will actively involve myself in personal finance matters and learn to live within my means. My general good health and financial security will provide me a stress free and happier life, which in turn will decrease the chances of illness as I get older.”

The magical positive feedback loop that having an internal locus of control provides you with should be so self evident by now that even if you still think you have an external locus (you can check your score here by the way) I am hoping that you can see the benefits of trying to change your perspective to internal, and realize you have a lot of thinking to do about this.

I’d love to hear from views from people either end of the spectrum so let me know in the comments what you are and if you think that is currently the best view to have. And have I been entirely fair to the Externals? (Also please leave what you scored in the test if you did it!).

So what one did you pick?! See you at early retirements-ville soon, number 2 choosers!


*I am assuming you appreciate the irony here of external factors creating your external locus of control, so it’s “something elses fault that you think it’s all something elses fault”. Back ↑

**I find especially if the ideas being read about are actually good self improvement-esque ones, so give it a go and see what happens. I generally hate self-improvement stuff as most of it seems like happy clappy rubbish. However if there is some decent science or maybe some classical philosophy behind the ideas I find them to be pretty, uh… helpful. The old ideas are usually the best (that’s why they are still around). Back ↑



The Psychology of Seinfeld (picture credit) – and what a great idea for a blog!


Internal Locus of Control: Develop one, retire early