Finance 101: Control what you can control

And let go of the rest.


In today’s hyper-connected information and news-cycle world, we are constantly buffeted with more, often contradictory, messages. Everything moves fast. We are subject to so much more than we previously were. Whether it’s politics, the economy, or our work, it all gets more challenging. And recently stock market volatility has increased again. It can make it pretty hard to keep an even keel. This often leaves people feeling unsure. And when people are unsure, they look for those things they think they can rely on, that they can control. Unfortunately, those things are few and far between. The world has a habit of teaching us how little we really can control, especially when we think we control more than we do. Such notions of control are illusory.

When it comes to your own financial well-being it’s really no different. It may be even harder. But lots of people and companies would have you believe otherwise. They have soothing stories to tell you and things to sell you. Things that will make the bad stuff go away. They will remove the confusion and help you control those things that you now cannot. Take their hand and believe what they say; they can see over those mountains that you cannot. The reality is that there are really just a few important things you can control, and those stories they tell you are almost always rubbish.

So let’s get very clear on what you can control and what you cannot control or do.

You can control how you will behave and react to market events, both good and bad. This calls for a clear plan ahead of time for what the right course of action is, BEFORE the events arrive. Don’t wait for things to go wrong to start making decisions.

You can control how much you pay in investment expenses.This is open to everyone, and not enough people know or consider the impact of expenses on their future well-being. This is the simplest way to have more savings.

You can control how you allocate investments and the level of risk that you need to meet your goals. Have a plan for this and stick with it.  Even if it’s far from perfect, it will probably get you results. But you have to have the discipline to stay with it. Having the best plan for you in place will help you more.

You can control how much tax you pay in your investment accounts. A thoughtful approach to when you create taxes, when you take losses, and where you hold certain investments will help you retain more of your money. Think of this as your asset location.

You can control how much you save and how much you spend. This one seems harder, but it’s really just a choice. New car, or increase your 401(k) contributions? You can always get the car two years from now.

You can control the choice of trying to increase your income by upgrading your skills and pursuing better opportunities. There are no guarantees, but you do control that possibility. Earning more is a lot more effective than trying to trim monthly costs.

You can control whether you use an adviser or choose to do all the work yourself. All of the items above that you can control will be affected by how you manage your own feelings and emotions. Having an adviser can help you truly gain control of those things, and navigate your path to the future.

And, of course, there are many things you cannot control.

You cannot control what your portfolio returns will be, especially in the short term. You can look at history and probabilities, but you will still be working with, at best, an educated guess. Stick to your plan and take what is available to you.

You cannot control what the stock or bond market is going to do. Thinking you can guess what will happen next, in the short term or long term, is invariably destructive.

You cannot control or predict what the economy will do. Even if you guess right, you still need to guess what the market’s reaction will then be. The odds of you doing both are quite low.

You cannot pick which mutual fund or investment will do the best going forward. No, no you can’t. And neither can an adviser. Looking at past returns won’t help you do this. Get reasonable market returns and move on with your life.

You cannot solve all your investment concerns by buying that very complicated annuity; you probably won’t get what you think you were told. But the broker will be quite pleased with his commission.

You cannot control what the financial media will try to tell you to do or what to fear. Be skeptical of most of what you read in their stories. Their job is to get you to read, and many will print whatever they believe will grab your attention, not what’s necessarily helpful or true.

The world is a place where choices are made and results are created. And people’s abilities to influence those results are not strictly under control. They really aren’t even moderately under your control. Choose to control those things you can, and try to make peace with those things you cannot. Even though people control only a few things in their financial lives, those things that can be controlled are exceptionally influential to our success. Having a solid plan that makes best use of those things that can be controlled, and putting the odds in our favor, is the best we can do, and should serve us well. Accepting we can’t control a lot of things helps us move forward. Simply controlling those things that we can allows us to ignore the rest and reach our goals with some peace of mind.

John Kageleiry is a business writer and financial planner. Have a question for “Finance 101”? Email it to