To maximize your financial future, you must avoid a scarcity mindset toward money. But what exactly is a scarcity mindset and why is it such a bad thing? Is it really all that bad anyway? In short, yes. For most people with this money mindset, it can be financially crippling, sabotaging current and future financial wellness and success.
So, what exactly is a scarcity mindset anyway?
A scarcity mindset is a fear that resources and wealth building opportunities are either inadequate or altogether unavailable to you. This mindset is often the result of growing up either in poverty, or as a result of being raised by at least one parent that grew up in poverty. Both are understandable causes, but the direct lived experience is harder to move beyond. After all, directly growing up with the lack of basic necessities like food, clothing, or even housing can leave deep psychological hooks that might go back to your most formative years.
But it doesn’t even have to be that extreme. Even experiencing familial hardship after a job loss could be enough to trigger what could become a lifelong mental block when it comes to finances.
Hey Ozzie, that sounds bad and all, but is a scarcity mindset really all that bad?
Yes. A scarcity mindset can really be that bad. People who suffer from this filter over their financial world view often don’t even realize it themselves. The mindset becomes an anchor over financial progress, often paralyzing you from even taking the first steps toward financial freedom and independence. It’s common for a person to have a totally defeated mindset, often feeling any work or effort toward building a secure financial future is impossible for them. This scarcity mindset is often the biggest reason for generational cycles of poverty or poor financial habits.
There is a silver lining, though. There is something you can do to take back control of your current and future financial wellness and success. You do have the power to take control.
Here are two options to help avoid or overcome the shackles of a scarcity mindset, one of which worked for me:
1. Develop your self-awareness
This first method is in fact what worked for me. This is admittedly not easy, but it is something you can work toward every day. The ability to take a look in the proverbial mirror and be honest with yourself about what you see, where you can improve, and the work that needs to be done, is all it takes. It’s both incredibly simple and incredibly difficult. Because it involves looking at yourself and accepting what you actually see and who you actually are, versus what you want to see or who you want to be. Honesty with one’s self is incredibly difficult, but you don’t have to develop some perfect sense of introspection in order to do this.
Little steps each day go a long way
So what does that look like as it relates to a scarcity mindset? It means thinking about how you feel about money. Not things you want to buy or your frustrations about not having as much as you want or need. I’m talking about the way you view the overall concept of money. Do you feel good when you think about the concept of money? If not, why? What other emotions come up? Anxiety? Fear? Shame? Are there any specific negative memories or events tied to the way you think about the concept of money?
Identifying the negative anchors that are attached to your concept of money and, most importantly, working toward decoupling them, is the key. You can choose to develop a healthier view of money, it’s place in your life, and what it can do for you both individually, and for the people you love.
This approach has worked for me individually, and I’m confident it will work for many people out there. Often times simply illuminating a problem and choosing to take a healthier approach is enough to bring about change. But many times, it is not enough. There is nothing wrong if even after identifying your individual challenges with money and a scarcity mindset, you can’t find a way to break the mental shackles. We all need a little help from time to time, so that transitions to the second option in trying to overcome the mental shackles.
2. Consider therapy
Even if you aren’t one that would normally entertain the idea of therapy in many other areas of your life, if you’re struggling with a scarcity mindset, you should find a mental health professional to help you work through it. Whether or not you can identify specific time periods or events in your life that might have caused it, go and speak to someone qualified and equipped to help.
Not much more to add to this one, but I can’t overstate the importance of shedding this financial anchor.
A scarcity mindset could cost you millions
I think I should also mention here, you must be careful not to overcorrect and go too far in the opposite direction when trying to counter the scarcity mindset. It’s great that you want to shake the mental shackles, but there is a risk of overcorrection. You must learn the difference between toxic thoughts or feelings about money and healthy instincts and intuition warning you away from making bad financial decisions. Educating yourself will help you identify the difference. Thankfully, you’ve come to the right place here at Better Money Club.
Aim for a healthy balance.
Once you have overcome your scarcity mindset, belive it or not, you might actually have an advantage over most people. There are many people who do not have a healthy enough appreciation of just how bad financial struggles can get. But you do. You know exactly how far the fall can be, how hard it the ground can smack you when you land. Because of your lived experience, you have developed far keener senses of just how dangerous taking certain risks can be—so long as you’re not viewing the situation from an unhealthy filter.
You have the power to find a balanced approach to your financial future.
