Why I’ll choose ‘controlling money’ anytime

Today I was thinking that introducing new terminology is not a very good idea; and not when one writes about money. Except if the new terminology makes real contribution and is not simply a re-branding, or even, re-packaging of already existing stuff. So what is the difference between ‘personal finance management’ and ‘the money principle’ or mastering the art of controlling money? Am I only repackaging?

Thinking about it, there is only one but very substantial difference between ‘personal finance management’ and learning to control money. Just like finance management, personal finance management is defined by its outcomes, namely investments, savings, mortgages and pensions. These are also financial ‘products’ – so personal financial management mostly focuses on informing decisions about the selection and accumulation of financial products.

In contrast, the ‘money principle’ generally, and learning to control money more specifically, is very process focused. It is about how we achieve mastery in all matters related to money and how we understand and, if we think this necessary, change our relationship with money. But what does it mean to control money?
We can say that we control something when we can change its behaviour according to our perceptions of propriety, desirability etc. Any control, particularly social control which involves people, is also about power and power in turn builds on deficiency. Not any old deficiency but the deficiency of something that we want, need or value very highly. Anything can become a source of power and a pre-condition for control.

This is a very academic way to say that anything can bring power given the right circumstances: on a desert island a bottle of water gives the one who has it enormous power. I will discuss the matter of power in our relationship with money in a different post. Let us get back to controlling money and assume that we can do it because we are not under its power.

Before setting out the elements to controlling money we have to be clear that there is a difference (but also an overlap) between ‘controlling money’ (which is mainly what banks and governments do or at least are supposed to do) and ‘controlling your money’ (which is what each of us has the responsibility and honour to do). Here I am interested in the latter.

When it comes to controlling your money there are three things to watch: expenditure, income and ‘the difference’. I suppose expenditure and income are pretty clear by now. ‘The difference’ can be positive or negative; when it accumulates it becomes either debt or savings/investments.

There are three elements to any control. These are: information (knowledge), standards (norms) and action.


Control is not possible without robust knowledge about the situation. Controlling your money is not possible without collecting information about your financial situation. This is done, first and foremost, by working out your five important numbers. If you need to remind yourself how to do that check the posts under ‘back to basics’.

To control your money effectively you need to go beyond the snapshot, beyond the one off information about your income, expenditure and ‘the difference’. Opinions on how much information to collect and how often to do it vary but I will recommend to follow income and expenditure continuously and to calculate the difference once every month. ‘The difference’ can be integrated into the Money Principle Net Wealth Calculator.

Apart from keeping yourself on top of your numbers, controlling your money requires much broader knowledge and education. This includes: knowledge of ways to reduce expenditure (controlling buying, buying wisely, batching, building store cupboards, wants and how to limit these etc.); knowledge about ways to increase income (for example job perks, ways to get promotion, increasing efficiency, targeted effectiveness, starting business etc.) and ways to maximise the effects of ‘the difference (e.g. investments, pensions, debt repayment strategies, mortgage repayment possibilities etc.).

Getting to grips with all the information needed to control effectively and efficiently your money is but the first step – and it is no good at all without the next two elements of control.

Standards and norms

What collecting information and generating data gives us is ‘facts’. How reliable these are is an interesting point the discussion of which cannot be had here. What is important, however, is that we never think, feel and act on the basis of facts. Behind every thought, feeling and action there is a mixture of fact (information) and judgement (standards and norms).

Forming a judgement is always relative – which put simply means that we don’t form judgement in isolation but in comparison. Let us have an example here.

You meet a friend and they look distraught; a bit of prodding reveals that she has just discovered that as a couple they have £17,500 debt. Having heard this, instead of sympathising you relax and say ‘Is that all? I got really worried for a second back there.’ How can this reaction be explained? By thinking about different possible comparisons! One, money is really low on your list of values – so hearing that it is ‘only’ about money was a relief. Two, this doesn’t sound like such a big amount to you because it is only about three times your monthly pay after tax. Three, you know that your friend has savings that can clear a substantial chunk of this and didn’t think that she is distraught because she cannot trust her partner any longer.

See, the outcome of the comparison depends on what you are comparing with; or in other words on your standards and the norms of society.

Using this element to master the art of controlling your money is as important as collecting all necessary information. Many of the standards you will have to work out for yourself and a most important among these is about ‘how much is your enough’ when it comes to money.

A word of caution is due here. Most people form a judgement about their financial situation by comparing it to that of others, to their previous situation or to their expectations. Psychology mentions all three types of comparison as a source of unhappiness. I believe that people who strive to achieve mastery in the control of their money ought to behave like top athletes – they compete with the clock; not with others and not with themselves. I know that I felt much better and level headed about my finances when I calculated my ‘enough’ without comparing with others, my past or my expectation.


This element of controlling money is really simple and straight forward. Take action! You may have the information and knowledge, you may have formed a judgement but without taking action you are not in control.

Taking action is the stumbling block for many who aspire to control their money.

Can you see how ‘controlling money’ is different from ‘personal finance management’? One is about the process of control through discovery – of money, of yourself and of your relationship with money – and acting upon this. The other is about financial products and ready, off the shelf solutions.

This is why I’ll keep going with ‘controlling money’!

Leave a Reply

Your email address will not be published. Required fields are marked *