Controllable vs Uncontrollable

Controllable vs Uncontrollable

Have you ever hit a bad stint in your life, where you are stressed about something?  Everyone’s go-to advice always seems to be to not worry too much about it as you can only control what you can control.  You can’t control certain outcomes, how other people react, or things that are in someone else’s hands.  This got me thinking of all the parallels when it comes to one’s finances. 

I’ve been privy to people’s personal finances for more than half my life.  In doing so you become an excellent observer of many things.  One of those main things is really understanding the triggers that go into good financial planning, along with how to best control the outcome.  I figured what better time than now to share some of the observations I’ve gleaned over that time.

CONTROL VS CAN’T CONTROL

Let me break down some of the key triggers or levers that really impact your financial health.  I’ll then attempt to briefly explain what is controllable and what isn’t. 

Investments–

It is no secret or surprise, this kicks off my list of control vs. no control.  Investing is key to a good financial plan.  It is so important that without it you’d be hard to be able to do most anything.  Thus, we should understand what is controllable and what isn’t when it comes to investing.

Uncontrollable– We cannot control the markets plain and simple.  We can’t time the markets either despite our best efforts. We also have no ability to control the companies you are investing in. 

Controllable– We can control our behaviors and attitudes when it comes to investing.  It can be hard to do, but we are able to not panic or overreact in bad and good times.  As investors we have control over how much we invest, our investment philosophy, and our allocations.  In a weird way, we control everything about investing except the investments themselves. 

Savings–

One of the keys to having any investments or protection against the unforeseen is our ability to save appropriately.  There are many tentacles of a good savings plan and many things we can or can’t control.

Uncontrollable– We can’t control taxes or interest rates.  We also can’t control that savings is a by-product of expenditures. 

Controllable– The good news about savings is much of it is controllable and very important to your financial health.  We can control, by in large, how much we save on a recurring basis.  We can control where we save these dollars too and how to bucket different savings for different goals. 

Expenses–

The big brother of savings is our own expenditures.  It is perhaps the single greatest thing to understand to be able to do any sort of financial planning.  Our expenses, in a way, are our financial exoskeletons. 

Uncontrollable– We have no ability to control emergency expenses that aren’t expected.  In addition, we can’t control the fact that expenses are a necessary evil in a democratic and free society.  Without expenses, we literally can’t do anything.

Controllable– In a weird way the controllable part of expenses may be the single most important component of one’s financial health.  We have the ability to spend less, spend responsibly within our means, and spend smarter.  Our ability to control our spending has so many ancillary implications it can be its own blog in and of itself.

Work/Earning–

Our ability to work and earn income is clearly a big part of our finances.  In a weird way, it is the birth of your finances.  Until you got that 1^st paycheck none of us really had any finances to plan with.  That said our continual earnings are massive when it comes to a good financial plan.

Uncontrollable– Sadly we can’t control everything about our jobs.  There is only so much you can control in your ability to get a job, keep a job, and what they will pay you.  I wouldn’t say you have no control over these specific items, but certainly, plenty that is out of your control.

Controllable– Now it is true we can’t control many factors of our income or jobs.  That said, we are able to generally control how long we work and when we retire.  If you retire at 50 or 60 or 70 years old makes a huge difference in your ability and what is needed to succeed in retirement.  You can also control what is most important to you when it comes to your earnings.  Is staying late and moving up the corporate ladder where you want your efforts, or perhaps working longer making less to spend more time with your family or your passions?  No wrong answer, but let’s certainly understand you do have control here and it can be very impactful. 

Control Freak

You don’t have to be a control freak to be good at finances.  That said it is critical to understand the impacts of your decisions and where there is room to improve.  It certainly is a journey for most and I (and my colleagues) relish the opportunities to work with amazing people to help educate them and keep them on the right track. 

Hope you enjoyed this little nugget and stay wealthy, healthy, and happy.