This is a guest post from Flexo at Consumerism Commentary, the granddaddy of personal finance blogs. Previously at GRS, he shared how to be the Chief Financial Officer of your own life.

Success, financial or otherwise, comes from within.

According to studies by psychologists and researchers, people with an internal locus of control are more apt to plan for long-term goals, delay gratification, and accept more risk for the promise of more reward. These qualities should sound familiar to readers of this site because they are precisely the characteristics needed to “get rich slowly.”

The locus of control is a way of looking at your circumstances and assigning cause. The difference between external and internal is the difference between saying, “I didn’t get the raise because the company is tightening the belt,” and, “I didn’t get the raise because I didn’t prove beyond a reasonable doubt I deserved it.” It’s also the difference between, “I got the promotion because it was finally my turn after being here long enough,” and, “I got the promotion because I performed well on that last project.”

Of course, shifting to an internal locus of control is more than saying these things, it’s internalizing the attitude and incorporating the outlook into your personality.

Obsessed with success
I once had a boss who took this concept to the extreme. “Ed” believed in the necessity of dedication, hard work, and personal sacrifice for achieving and breeding success, but he took it to the point of obsession. In his view, even the most seemingly unrelated outcomes are converted into blame. Here’s an example, slightly modified from the truth to obfuscate location:

One day I was late to work because I was caught in traffic due to an accident on the freeway. Ed was aware of the accident, but he wouldn’t accept my reason for tardiness. It was important to him that I accepted responsibility for being late, not necessarily because I could have anticipated the accident and left home earlier that morning (he believed that sleeping late was a result of a subconscious choice not to wake up due to the lack of enjoyment of life, rather than a physical need for the body to rest), but because I could have chosen to live closer to the office and, even more importantly, that a lack of respect for timeliness invites incidents that allow me to arrive late.

That was a little too extreme for me.

I could agree that there were certain actions I could have taken to reduce the likelihood of arriving late, including waking up earlier or living closer to the office (which would necessitate taking a roommate in order to afford the more expensive urban rent). However, I couldn’t go so far as to admit that simply having an internal negative attitude can manifest itself in events outside of my control, such as traffic accidents. [J.D.'s note: I agree.]

Looking inward
Later I came to better understand Ed’s point of view and to appreciate the less extreme aspects of his philosophy, particularly the difference between an internal and an external locus of control.

I had been attributing certain things that “happened to me” to outside, uncontrollable forces. More specifically, my personal philosophy called for attributing the good things I achieved to my skills and abilities while attributing the bad things to “forces beyond my control.” This combination placed me squarely as an “external.”

Success, defined by a personal goal, financial or otherwise, can be easier achieved by shifting to an internal locus of control. People who routinely achieve their goals are more likely to attribute their success to their ability, talent, and hard work rather than just luck or chance. Any mistakes they make are just that; while bad luck is something that cannot be controlled, errors in judgment or missteps allow successful people to learn, adapt, and succeed.

It took some time for me to understand that I had more control over my situations than I was allowing myself to believe. Shifting to an internal from external point of view is not as simple as flipping a switch. It’s not an intuitive adaptation to make because the philosophies that drive your point of view are often deep-seated. But it is possible, and perhaps necessary, for people who are interested in the qualities necessary to get rich slowly.

Back to the future
There is an important limit to an internal locus of control. Although you need to accept responsibility for outcomes, there are certain things you can’t control no matter what decisions you make. There is little you can do to affect the rotation of the earth, the passage of time, or inflation (unless you are Superman, Dr. Emmet L. Brown, or Ben Bernanke). Being able to accept what is truly beyond your control is just as important as taking responsibility for as much as possible.

What is beyond your control? Many of the most important financial habits and lessons are learned as a child from adults modeling behavior. Without good role models and sufficient education, kids can become young adults without the mental tools for financial success, and this can be a cycle lasting generations. As an informed adult, however, every financial decision can either help or hurt your condition, and these decisions (which affect your future) fall within your control.

If getting out of debt is your goal, it will not help to blame the credit card companies for your current position. Yes, it is true that credit card issuers bear some responsibility for using deceptive practices designed to trap consumers into a debt spiral, but to succeed at debt reduction, it’s important to realize that you are in control and have the ability to beat the credit cards at their own game, either by managing credit usage responsibly or by opting out of the industry. It takes education, determination, and discipline.

If earning more income is your goal — and that might be necessary if you are getting out of debt and are currently spending more on the basics than you are earning — accept responsibility for the exact amount of your salary. You are getting paid your hourly or yearly rate because that is what you succeeded in negotiating or the choice you made to accept the job. The possibilities for earning more money are endless. If you perceive your salary as low for what you do — I certainly do, and I have a feeling I’m not alone — accept you have the power to change it. There is always a choice.

Rather than blaming your financial situation on bad luck, a broken system, or your parents’ negative influence, determine which choices you made — or didn’t make — brought you to where you are, and make some new ones. An external locus of control is a self-limiting philosophy, so make new choices based on an internal point of view. These choices can have a strong effect on your finances.

J.D.’s note: One of my mantras is: “Nobody cares about your personal finances more than you do.” It’s true. Until you take control of your money, you cannot expect anyone else to help. The change has to begin with you. Photos by specialkrb and theritters.

This article is about Basics, Choices, Psychology, Self-Improvement