Becoming proactive: The number-one secret to wealth, freedom, and happiness

A few weeks ago, I cataloged the difference between successful people and unsuccessful people. Based on my reading (and personal experience), I compiled a list of 61 habits that foster wealth and success.

While writing that article, I found one critical difference was mentioned again and again. Every author and expert on the subject shared some form of the following. Generally speaking: Successful people believe they control their destiny and unsuccessful people do not.

In Secrets of the Millionaire Mind, for instance, T. Harv Eker lists seventeen ways the financial blueprints of the rich differ from those of the poor and middle-class. Number one on his list?

Rich people believe: “I create my life.” Poor people believe: “Life happens to me.”

This message comes up time and again when discussing the difference between those who succeed and those who don't. Successful people are proactive, they take responsibility for their future, they have an internal locus of control. Unsuccessful people believe they are victims of fate or circumstance.

Let's look at why many folks feel like they're not in control of their lives — and how it's possible to learn to be proactive (even if you're old like me and set in your ways).

Permission and Control

[The Seven Habits of Highly Effective People]As children, we're conditioned to ask permission whenever we want to do something. You need permission from your parents to leave the dinner table or to go outside and play. You need permission from your teacher to use the bathroom.

Even as adults, we feel compelled to request permission. You need permission from your boss to leave work early. You need permission from your spouse to grab drinks with your friends instead of weeding the garden. You need permission from the city to build a shed in the backyard.

As a result, most of us have developed an external locus of control.

In personality psychology, the term locus of control describes how people view the world around them, and where they place responsibility for the things that happen in their lives. Though this might sound complicated, the concept is actually rather simple.

  • If you have an internal locus of control, you believe that the quality of your life is largely determined by your own choices and actions. You believe that you are responsible for who you are and what you are.
  • If you have an external locus of control, you believe that the quality of your life is largely determined by your environment, by luck, by fate. You believe that others are responsible for who you are and what you are.

This isn't an either-or proposition, obviously. Locus of control exists on a continuum. But many people tend to favor one side of the continuum over the other.

Julian B. Rotter developed the locus of control concept in 1954 as part of his social-learning theory of personality. Stephen R. Covey popularized the idea in 1989 with his best-selling The Seven Habits of Highly Effective People. He urged readers to become proactive.

Becoming Proactive

Covey believes that we filter our experiences before they reach our consciousness. “Between stimulus and response,” he writes, “man has the freedom to choose.” Our self-awareness, imagination, conscience, and free will all give us the power to select how we'll respond to each situation in life.

Covey says there are two types of people: proactive and reactive.

  • Proactive people recognize that they're responsible for how they respond to outside stimuli. They have an internal locus of control. They don't blame circumstances, conditions, or conditioning for their state. They believe their existence is largely a product of personal choice derived from personal values.
  • Reactive people believe their condition is a product of their physical and social environments. They have an external locus of control. Their moods are based on the moods of others, or upon the things that happen to them. They allow the outside world to control their internal existence.

To illustrate the difference between proactive and reactive people, Covey discusses how we focus our time and energy.

We each have a wide range of concerns: our health, our family, our jobs, our friends; world affairs, the plight of the poor, the threat of terrorism, the state of the environment. All of these fall into what Covey calls our Circle of Concern.

Within our Circle of Concern, there's a subset of things over which we have actual, direct control: how much we exercise, what time we go to bed, whether we get to work on time; what we eat, where we live, with whom we socialize. These things fall into what Covey calls our Circle of Influence, which sits inside our Circle of Concern.

Here's a visualization of this concept from James Clear and Mr. Money Mustache:

[Circle of Concern vs. Circle of Control]

According to Covey, proactive people focus their efforts on their Circle of Influence. They spend their time and energy on things they can change. This has two effects. First, proactive people actually do affect change in their lives; and as they do so, their Circle of Influence expands.

On the other hand, reactive people tend to focus on their Circle of Concern. They spend their time and energy on things they're unable to influence (or can influence only with great difficulty). They try to change other people, to correct social injustices, to shift thought patterns of states or nations. Their efforts are largely frustrating and futile. What's more, as they focus on their Circle of Concern, their Circle of Influence begins to shrink from neglect.

Any time you shift your attention from your Circle of Influence to your Circle of Concern, you allow outside forces to control you. You sacrifice your freedom. You place your happiness and well-being in the hands of others. If you don't act for yourself, you're doomed to be acted upon.

But what about about luck? Aren't there times when we really are at the mercy of the world around us? Of course. But our responses are always our own. Eleanor Roosevelt said, “No one can hurt you without your consent.” Covey agrees:

It's not what happens to us, but our response to what happens to us that hurts us. Of course, things can hurt us physically or economically and can cause sorrow. But our character, our basic identity, does not have to be hurt at all. In fact, our most difficult experiences become the crucibles that forge our character.

Bad Examples

Successful people believe they're in control of their destiny and unsuccessful people do not. Let me give you some specific examples.

  • I know a woman who owns a business. The business is always on the brink of collapse. She believes her store struggles because of onerous city codes and an unresponsive landlord. Yet, other businesses around her thrive despite similar circumstances. She doesn't see that the problem could be with the way she runs the place: the store's odd hours, its poor condition, the way she treats her customers.
  • My youngest brother has had his share of financial struggles. Within a one-year span, he lost two homes to foreclosure and declared bankruptcy. At first, he didn't own any of this as his fault. He viewed it as bad luck, as if he and his wife were simply victims of circumstance. They thought they were screwed by stupid people and a bad economy. A decade later, Tony has a different view. I spoke with him recently, and it was refreshing to hear him take some responsibility for what happened.
  • For years, my own locus of control was primarily external. I was overweight, in debt, and unhappy. On some level, I knew that my state was a result of my choices, but most of my time was spent rationalizing reasons I couldn't change: I didn't have time to exercise, my car broke down, I didn't get the job I wanted. Nothing good ever happened to me. (Notice that phrase: “happened to me.”) I thought most things were outside of my control.

The good news is that people can change. If you have an external locus of control, you can develop an internal locus of control. If you're reactive, you can become proactive. I know because I've done it myself.

In time, I realized that if I wanted something more from life, it was up to me to obtain it. Gradually, my locus of control shifted from an external focus to an internal focus. I decided that I am responsible for my own destiny and my own happiness. It's up to me to live a life I love.

I am responsible for my own well-being, and you are responsible for yours.

If you're unhappy, nobody else can make things better for you. You must make things better for yourself. Focus on the things you can control, and use that control to fix the other things that are broken. In this way, you'll gradually gain confidence and greater control of your future well-being.

Good Examples

Since I've become aware of this distinction — between folks who believe they're in control of their lives and those who don't — it's been like breaking free from the matrix. I can't help but see the patterns everywhere I go.

I hate to admit it, but it's often tough to talk with folks who have an external locus of control, people whose Circle of Concern far exceeds their Circle of Influence. It's hard to watch friends repeatedly make poor choices. On the other hand, it's refreshing to spend time with people who don't let life get them down.

My girlfriend, Kim, is a great example of somebody proactive. She never lets anyone or anything hold her back. If something goes wrong, she finds another way to achieve her goals. She takes complete and total responsibility for building the future she wants.

This manifests in lots of little ways:

  • If she doesn't understand something, Kim asks questions.
  • If she has a problem with a company, she calls to explain (not complain about) the problem.
  • If something is broken, she figures out how to fix it.
  • Kim never waits for things to get better but actively seeks ways to improve her situation.

Here's a great example of Kim's proactive nature in action.

During our 15-month RV trip across the United States, we paused for six months to rent a condo in Savannah, Georgia. Kim could have spent those six months relaxing and seeing the sites, but instead decided she wanted to seize the opportunity to make some money.

The moment we knew we'd be wintering in Georgia, Kim started the process of getting her dental hygiene license. It took several weeks for all of the paperwork to process. Rather than wait and wonder, Kim made polite calls every week to make sure there were no problems.

The day she received her license in the mail, Kim hit the pavement. She scoured the city, dropping off résumés and speaking with doctors. Within a couple of days, she started getting calls asking her to do fill-in work while other hygienists were sick or on vacation. She also got a couple of offers for a long-term positions. During the six months we were in Georgia, Kim had as much work as she wanted.

When we returned home to Portland, she applied the same technique here. She pounded the pavement, putting her name out there as a potential fill-in hygienist. For a few months, she tried various offices. Eventually, she found two practices where she fit in perfectly. Now she has steady work — and constant offers from the other places she filled in.

Simply being around Kim and observing her strong internal locus of control has helped me become more proactive! I'm still not as good as she is, but I'm getting better.

You Are the Boss of You

Shifting from an external locus of control to an internal locus of control isn't just important for happiness, but also for making meaning in your life, for obtaining personal (and financial) freedom. Freedom comes from focusing not on your Circle of Concern, but exclusively on your Circle of Influence. As long as you allow yourself to dwell on the things you can't control, you are not free.

Obviously, shit happens. But you know what? Shit happens to everyone. Ultimately, who we are and what we become is determined not by what sort of shit happens to us, but by how we respond to that shit.

Victor Frankl was an Austrian psychiatrist who survived the Nazi death camps during World War II. The extreme suffering and harsh conditions caused many inmates to lose their will, to choose death.

To be sure, prisoners often had no control over whether or not they died. But Frankl observed:

A man can, even under such circumstances, decide what shall become of him — mentally and spiritually. He may retain his human dignity even in a concentration camp.

In the classic Man's Search for Meaning, he wrote:

Everything can be taken from a man but one thing: the last of human freedoms — to choose one's attitude in any given set of circumstances, to choose one's own way.

Even with a severely restricted Circle of Influence, prisoners still had control of how chose to approach their destiny.

Accepting responsibility for your own fate and attitudes can be uncomfortable and intimidating. There's a kind of solace when you can attribute your situation to the winds of fate, the will of god, or the workings of the universe.

But recognizing that you're a free agent can also be liberating. When you take matters into your own hands, you shed your fears, create your own certainty, and discover that you're freer than you ever imagined possible.

You are the boss of you. You don't need anybody's permission to get out of debt or to buy a house or to ask for a raise. And nobody's going to come to you out of the blue to explain investing or health insurance or your credit card contract. Take charge yourself.

Focus on the things you can control. Use that control to remove constraints and complications from your life. Strengthen and stretch your Circle of Influence. This is the only path to changing your Circle of Concern. You have no control over the hand you're dealt, but you can choose how to play the cards.

Here's a simple exercise from The Seven Habits of Highly Effective People: For thirty days, commit to working only on your Circle of Influence. How? Keep your commitments, to yourself and others. Don't judge or criticize other people, but turn your attention inward. Don't argue. Don't make excuses. When you make a mistake, accept responsibility and fix it. Don't blame or accuse. When you catch yourself thinking “I have to…” or “If only…”, stop yourself and choose to reframe the thought in a more positive light. As far as possible, accept responsibility for your circumstances, actions, and feelings.

More about...Psychology

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Dave @ Married with Money
Dave @ Married with Money
2 years ago

I love this post – it highlights many of my own beliefs. I actually wrote an article about financial locus of control a few months ago ( https://www.marriedwithmoney.com/financial-locus-control/ ) and while my sample size is small because I had some issues with the embedded poll, it was interesting that 2/3rds of the respondents said they were financially successful and had an internal locus of control. All that being said, this is missing a huge part of the equation, and that is privilege and circumstances. While I agree that everybody can be proactive, the fact of the matter is that there… Read more »

Jim Wang
Jim Wang
2 years ago

That is a huge part of the equation but it’s also a crutch you can lean on to, at least to yourself, absolve you of responsibility in your own life. Your starting point matters but if you point it as the reason you haven’t achieved as much as you dreamed, it’s only going to hold you back.

Ralph G
Ralph G
2 years ago
Reply to  Jim Wang

Jim, I don’t think that was the point Dave brought up. I have seen privilege and circumstance close up, and it is indeed a huge hurdle that you must take into account. You must look for alternative ways around that hurdle, work harder with fewer resources, and yes, accept that the level of success may at times not be what you worked for. For example, a farmer with a team of mules will most likely be more successful than a farmer breaking sod by hand. On success, I find that if you do all withing your power to succeed, then… Read more »

Darien Morgan
Darien Morgan
2 years ago
Reply to  Ralph G

There’s a definite need to understand where on the financial spectrum you start from, but with an internal locus of control, the vast majority of the hurdles presented by circumstances of birth are surmountable or will be in the future.

In fact, the whole premise of the ‘privelege doctrine’ is that you don’t control what happens in your life, and that the people who have more privilege than you are the ones that control your life. This is patently false.

L
L
2 years ago
Reply to  Ralph G

Who is defining “success”? Not everyone considers the accumulation of material wealth to be “success.” Very narrow and sad thinking.

Pete
Pete
2 years ago
Reply to  Jim Wang

Jim, if I may call you Jim? You are, in my opinion completely correct. What I hear you saying is that you acknowledge the fact that “very, very difficult situations” require MORE work to overcome than “difficult situations” but that the principles presented in this article are still in fact correct. ….If water puts out a small fire, well then yes, more water will be needed to put out a bigger fire, but the principle is the same. LLaP

Norman G.
Norman G.
2 years ago

It depends on what you mean by success. Look at Donald Trump, he has lots of money, power and recognition. I’m sure that he believes he controls his own destiny. But he’s not a happy many and I think any enlightened person can see it. You state that unsuccessful people don’t believe they control their destiny therefore can’t obtain large amounts of wealth. However, a person’s success is actually based on how much love they are capable of giving and receiving and the two will always be equal in measure. Just because a person is satisfied with say, maybe a… Read more »

Joe
Joe
2 years ago
Reply to  Norman G.

But you’d agree one has to allow themselves to be open to that, correct? That acceptance is also a choice.

Debi
Debi
2 years ago
Reply to  Norman G.

Norman, you have said it beautifully. Life isn’t about what you collect, money and power included, but how you lived and more importantly, who you loved. Thank you for the reminder.

AJ
AJ
2 years ago

Thank you for making this important and overlooked point!

DUSTIN COOK
DUSTIN COOK
2 years ago

I found your blog a couple months ago. I think the first post I saw was about you buying back your site and history and rebooting. I was looking for a good read on how to turn my spending habits around. I have to be honest, 90% of the time I pass your articles in my RSS Reader without much more than a glance, but your title popped out to me this morning. This summer my fiance and I moved from Seattle to North central Washington, a small rural town of 2000 people. It took 2 years of planning and… Read more »

L
L
2 years ago
Reply to  DUSTIN COOK

So sad you can’t just be happy with what you have, each day. This is the cancer of our culture. “Ambition is the last refuge of failure.” Oscar Wilde

Wesley
Wesley
2 years ago

JD! So glad you’re back at GRS! I was a long-time GRS reader until you sold it back in the day. The other writers just didn’t jive with me.

Definitely bookmarked, and I’ll be back daily. I’ve always enjoyed your content, and read MoneyBoss sporadically. Great to have you back at GRS!

Kevin M. Rhoads
Kevin M. Rhoads
2 years ago

I think this is a great way of making sure to grab the bull by the horns but I don’t want people to think that all things are in their control. Knowing what is and isn’t in your control is a great way of doing planning and problem-solving. I know too many people who fight the hurricane rather than acknowledge its coming and prepare accordingly(that was a metaphor and literal). Identifying what is actually within your ability to change is also important in business so you don’t put your energy into tilting at windmills but rather avoiding windmills that might… Read more »

rosarugosa
rosarugosa
2 years ago

I wish everyone in the world would read this post – outstanding!

FrugalStrong
FrugalStrong
2 years ago

Yes, yes, a million times YES!!! Loved and agreed with every word!

JoeHx
JoeHx
2 years ago

I must be some sort of enigma because if you ask me if I have control over anything I’ll answer no, but I am very proactive, constantly looking for opportunities and trying to get ahead.

In other words, my words say I’m reactive but my actions show I’m proactive.

S.G.
S.G.
2 years ago

I would add that there are ways to push on the boundaries of the inner circle. For example if you want a better community (a concern) there are actions you can take to make that happen (influence). Finding where your concern contracts to where your influence is is a major part of making a difference in the world. I would also say that I agree that attitude is everything. Even things outside your control can have huge impacts on your influence. Whenever something bad happens TO me, something I couldn’t control I try to pick it apart for lessons or… Read more »

Wesley
Wesley
2 years ago

So, if I were looking for recent articles that JD actually wrote, how would I do this given the current setup? I started scanning articles, all posted by JD, yet some refer to multiple kids, shopping for purses and so forth. While I’m not going to assume his gender (/s), I’d like a way to find only JD’s writings. Old-school GRS made this easy. I knew what I’d likely be interested in and what would apply to my situation (not purse shopping, not budgeting for scads of children, not credit card infomercials…even though JD uses them to some extent now).… Read more »

dh
dh
2 years ago

All the spiritual texts from the beginning of time right up to the present moment teach that in order to gain freedom, happiness, and release, one must render the mind quiet. Of course, this isn’t the #1 secret to wealth lol, just freedom and happiness. I like this post from Dan Erickson on learning to think like a dog:

http://www.hipdiggs.com/want-simple-think-dog/

Pat
Pat
2 years ago

Two men looked out the prison’s bars,
One saw mud and the other saw stars.

maria@moneyprinciple
2 years ago

I love this one, J.D. It accords with my conviction, and main operating principle, that it is better to ask for forgiveness than to ask for permission. There is hope, it seems :).

AC
AC
2 years ago

One million percent agree, there has been so many times I have made the same excuses, this is a good reminder to focus on what I can control. Thank you!

Piecewise
Piecewise
2 years ago

Allow me to be the bleak, un-inspirational voice of pragmatism here. Being proactive is a positive thing, obviously, but I feel like many people use it in a very harsh and dismissive manner, effectively saying that anyone who isn’t successful is that way because they simply didn’t try hard enough. Here’s the facts of the matter: Being proactive is only one part of the puzzle as to how you become successful. There are plenty of people who are very proactive but also fail. Ever seen some episodes of dragon’s den or shark tank? There are a lot of very proactive… Read more »

Larry Ludwig @ Investor Junkie
Larry Ludwig @ Investor Junkie
2 years ago
Reply to  Piecewise

“The capitalist market is pyramid shaped; You need a hell of a lot more workers than you need bosses. We can’t all be doctors and lawyers and business owners.”

What you state is an economic fallacy. You can improve your lot in life and increase your wealth. And why couldn’t you start your own business to increase your income? You assume your income level is static throughout your life it is not.

Richard
Richard
2 years ago

I believe your real wealth resides in your ability to create your health. Without your health, good health, you really don’t have a foundation to create your worldly wealth – as one can explore in the balanced holistic view in understanding how the mind, body and spirit are integrated. And, more often than not we may have to move out of our comfort zone and create the quality of life “we” design by being accountable for choices we make – good or bad. I enjoyed the comments posted by Norman G. He revealed his passion for life by the experiences… Read more »

Bill
Bill
2 years ago

Several commentators have talked about “privilege,” and pointed out that a person who comes from a poorer economic background will find it harder to become wealthy than Donald Trump, who is the son of a wealthy man. Of course, this is true. The point of the locus of control discussion is not about becoming wealthy, even if you start from a broken home and have no working capital. The point is that if you live your life with the attitude that you are not in control of your future, you will tend to be reactive and in the long run… Read more »

Neeraj
Neeraj
2 years ago

Great article, great site!

FYI, I came across your article from Get Pocket (“Pocket”) from Mozilla.

https://getpocket.com/explore/trending?src=fx_new_tab&cdn=0

Maya
Maya
2 years ago

I’m really excited you’re blogging at this site again.

Steven@MoneyMarathon
2 years ago

JD, what an article! Thank you!

As I type, I’m browsing Amazon for the two books mentioned in your post. I’d heard of Stephen Covey’s book before, but never placed an order. However, Viktor Frankl’s book is new to me, but looks equally inspiring, albeit in far more tragic circumstances.

Thank you for inspiring, and look out for the referral fee as I have purchased these books using your link.

Kind regards,
Steven.

Tis Leigh
Tis Leigh
1 year ago

I like Kim’s story – such a creative way to make an effort even when you’re in a temporary living situation. Way to go, Kim! It makes me think about my upcoming travel plans and how to monetize any short stays…

Great article, great image to really sum up the two mindsets. Thanks!

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