In Grayson’s recent article, he talked about why a scarcity mindset will keep you poor. Boy, did that post ring a bell with me. All throughout the article, I recognized characteristics and behaviors that had plagued my husband and I for years. So I thought I’d share today how our (former) scarcity mindset was a key factor in getting us into big-time debt.
The Jekyll/Hyde-ness of the Scarcity Mindset
The scarcity mindset is a double-edged sword. Since it plays into your fears of not having what you need, it can:
A) cause you to spend money you wouldn’t normally or shouldn’t spend, out of a fear of not having what you need
B) keep you from making financial decisions that might actually help you to build wealth, out of fear of losing what you have
For years – almost two decades – my husband and I fell prey to this scarcity mindset. We’d start comparing ourselves to others and allowing fear to creep in. Then, we’d make purchases that would dispel that fear, such as a new vehicle, something new for the house, new clothing or whatever. Then, we’d panic about the money we’d just spent and start being overtly miserly, living in a state of panic until the credit card balance or car loan started to get down to a reasonable level. Over and over we’d repeat the cycle, getting in and out of debt.
So, the scarcity mindset causes you to hold onto money you should be putting into smart wealth-building, and convinces you to spend money that could be used for wealth-building on instant gratification purchases often made out of fear: fear of not being accepted, fear of not having your needs supplied, or fear of not being perceived as successful.
These fears can add up to lots of debt real quick. Maybe it’s because you’ve spent thousands of dollars on food stockpiles that you’ll never use because you’re afraid of not having enough. Or maybe you’ve filled your house with the latest and greatest of everything – by use of credit card – because you’re afraid of being perceived as unsuccessful. Or sometimes people buy themselves lots of “stuff” in the name of showering love on themselves if they feel rejected by someone or by their own low self-esteem.
Fixing the Problem
If you’re making poor money choices due to a scarcity mindset, there is a solution. Along with Grayson’s tips in his earlier article, try:
- Reminding yourself that having a secure financial situation is one of the most loving and success-building things you can do for yourself
- Making a list of what truly matters to you. For example, is having that shiny new car really on your list of top priorities, or is financial freedom more important to you?
- Stopping to think before each and every financial action, and asking yourself: Is the financial decision I’m about to make one that promotes a scarcity mindset or one that promotes a prosperity mindset?
- Making a financial plan. By having a financial plan, you’ll be pre-planning what you do with every dollar you earn, thereby minimizing your chances of spending it in the panic mode that a scarcity mindset can cause.
A scarcity mindset absolutely can be detrimental to your financial life: we learned that first-hand. But it doesn’t have to be. By learning to recognize your reactions to the fears that a scarcity mindset can promote, and by learning to overcome those fear-related reactions with positive actions that build wealth, you can ensure that your scarcity mindset is being replaced with a more beneficial prosperity mindset.
Image via VinothChandar