It’s All in Your Head: Why a Scarcity Mindset Is Keeping You Poor
“I can’t seem to get ahead. I guess I’m just destined to be poor.”
“I wish I could afford that.”
“This is good enough. I don’t really want the bigger house, better car or fancy vacation anyway.”
Do these sound familiar? If you’re like most people, they probably do. You’re frustrated at the end of the month because it feels like every penny you make goes toward paying bills, and you have nothing to show for your hard work. You see things that you would like to have, seemingly frivolous items like designer shoes or a new television, and walk away, thinking that because you don’t have the money now, you won’t ever be able to have what you want. You’re jealous of others.
While it’s true that basic necessities like food and shelter cost more than ever, the real reason that most people aren’t achieving wealth goals has nothing to do with how much money is in the bank. It has to do with how they think about money.
There’s Never Enough
Many people have what’s known as a scarcity mindset or scarcity mentality. In the simplest terms, the scarcity mindset is the belief that there will never be enough — whether it’s money, food, emotions or something else entirely — and as a result, your actions and thought stem from a place of lack. Instead of believing that you have enough, and there is plenty to go around, you cling to everything you have out of fear of coming up short. It manifests itself as something as small as under-tipping a server to keep your bill small, to a more substantial decision, such as not investing in the market because you’re afraid to lose money. When you have a scarcity mindset, all decision-making is based on the false notion that there isn’t anything else coming or that you can’t make more money.
The scarcity mindset prevents you from achieving wealth for several reasons. First, when you’re constantly focused on keeping what you have, you don’t seek new opportunities. Fear holds you back, so instead of becoming an entrepreneur, you develop a false sense of security from collecting a paycheck — forgetting that you’re putting your financial well-being into someone else’s hands.
Second, the scarcity mindset often makes you feel as if you aren’t worthy of wealth and success. You might be focused on just “getting by” and avoiding imminent disaster. Never mind that there’s no reason to believe that things will fall apart; you just want to stay afloat that so you’re reluctant to take any chances — even if it’s just investing a small amount of money. You may need that money for an unexpected bill, after all.
The scarcity mindset also causes people to make poor decisions. When you are worried about your bank balance, for example, you might put off opening the bills or pay at the last second (or even late). Yet the issue won’t go away on its own and in fact will only get worse — thereby increasing the feelings of scarcity.
Addressing the Issue
So how do you overcome the scarcity mentality, especially when it’s been your prevailing way of thinking for most of your life?
- Use the language of prosperity. Instead of saying “I can’t afford it,” say “I have other priorities right now.” Shift your thinking, and focus on the abundance that you do have.
- Let go of “stuff.” The scarcity mindset can often manifest as hoarding, as people often hold on to things long past their usefulness for fear they will have to go without. Let go. Donate unused or unwanted items to a worthy cause, and you’ll instantly feel wealthier.
- Avoid comparisons. Scarcity thinking often causes overspending, usually because you want to keep up with others. You let envy guide your decisions, causing huge bills. Don’t compare yourself to others; they may be overspending as well.
- Acknowledge others’ success. The scarcity mindset leads to jealousy not only in the material sense, but also in feelings of inadequacy or competition when others have success. To improve your own outlook, acknowledge the success of others and applaud their achievements. They may just inspire you to improve your own situation.
- Make small steps toward growing your wealth. Open a savings account. Invest a small amount of money in the stock market. Increase your 401(k) contributions. Build your safety net, realizing that you won’t miss a few hundred dollars here or there in the overall scheme of things.
When you change your mindset from scarcity to abundance, you become more tolerant of risk and understand that you need to spend money to make money — and that when you focus on abundance, it will come your way.