Internal and external locus of control has been identified as a mediating factor to financial behaviour and financial wellbeing. People who have an external locus of control believe that the environment influences their achievements or challenges and submit to fate or destiny. People who have an internal locus of control believe that their thoughts and actions influence their achievements or challenges and when they do have challenges they find a way to overcome them. Moreover, research has found that millionaires often have an internal locus of control as they are always looking for ways to increase wealth no matter what the environmental factors are.
As a result, to increase financial wellbeing and improve financial behaviour, you need to increase your internal locus of control and decrease your external locus of control. Additionally, financial attitude, financial literacy and financial belief of capacity to manage finances has an indirect effect on financial wellbeing. Research suggests that people who have higher levels of financial literacy are able to manage their money better, however in a world packed with information on websites, podcasts and other resources we still have many people with unhealthy financial behaviours and financial unwellness. An internal locus of control will increase an individual's capacity to use the information they know about finance for their own benefit and have a healthier relationship with money. They will take accountability and responsibility for their behaviour rather than believe the economy or other environmental factors is the cause of their financial challenges. In summary to increase your financial wellbeing take control of your finances no matter what the environmental factors are. Increase financial literacy and be proactive by using the information to improve your financial situation.
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AuthorArticles about mental health, money and behavior Archives
February 2024
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