Hello First name / friend,
Researchers estimate that just over 50% of the United States population has a scarcity mindset. But what is exactly is a scarcity mindset, what causes it and how do we overcome it?
Scarcity Mindset Defined
It is the belief that there will never be enough. “Enough” can refer to money, love, food whatever resources or items you place value on. When we hear scarcity mindset we might think of Ebenezer Scrooge. No matter how much money he had it wasn’t enough, but scarcity mindset not only affects our relationship with money, but our relationship with others and our well-being. If we remember the story, old Ebenezer didn’t have any friends or other close relationships, and he was a constant sceptic which directly affected his happiness.
The Causes of a Scarcity Mindset.
Childhood experiences- If you grew up in poverty, or where you frequently heard your parents’ stressful conversations about paying bills. Maybe your parents had a period in which they were deeply worried about being laid off. Also, when parents have the go to reason of “we cannot afford that” for not purchasing something or if parents are constantly comparing their financial situation to others and complaining how others have more than them. You might have also been told growing up, stories of your ancestors living in the Great Depression.
Advertising- Ever clicked on a website for a purchase and saw where there was only a quantity of 1 or 2 left in stock? Did your heart beat just a little faster? We have all experienced this. Also, the advertising phrases, “Limited Time Offer” or “Offer Expiring Soon”. All of these reinforce scarcity thinking.
Behavioral Biases- A recency bias can lead to a scarcity mindset. If you tend to watch the stock market during a period in which it goes down in value, day after day, you can think that what is happening in the present will continue well into the future. This leads to the feeling that your current investments won’t be enough for future goals. That they won’t be able to provide for you.
Perception- You can have significant resources, but if you are constantly comparing yourself to others who have more than you, if you focus on what you don’t have this leads to a scarcity mindset.
Financial Awareness- Not having a budget, not tracking expenses, or not understanding what type of saving and investing is needed to reach your goals can lead to a scarcity mindset. As humans, when we lack information or knowledge, we naturally assume the worst.
Overcoming the Scarcity Mindset
Here are some tips and tools to help you overcome a scarcity mindset.
Know your Money Story- taking the time to understand the messages you received about money during your childhood helps one become aware of how those messages are still being subconsciously heard today. Once you understand what messages you are hearing, you can then develop and recite daily mantras that speak what is true today.
Recognizing Advertising for what it is- We need to remind ourselves that advertising has one goal in mind, to try to sell you something. The next time you read, “Limited Time Offer” or “Only 3 left in stock”, pause and take a deep relaxing breath. Next, think about why you are purchasing the item. Would you be as prone to click “buy” if these “marketing words” didn’t appear?
Keeping a Money Journal- More than likely you go from one day to the next never recognizing your thoughts or feelings around money. The biases you have (and we all have them) remain hidden because we never give them any thought. Take 10 minutes each day and write about all your thoughts and feelings centered around money events during that day. Then, begin to become curious. Ask yourself; Why did I have this thought, this feeling? Where did it originate from? And is it accurate? You will be amazed at what you will learn about you.
Focus on Gratitude- Comparing ourselves to others is a sad, losing game. Someone else in this world will always have more than you. Instead of focusing on what you don’t have, focus on what you do have. Have time each day when you slow down and think about what you are grateful for. When you find yourself playing the comparison game, stop and immediately name something you are grateful for. Avoid social media accounts that flaunt wealth or promote get-rich-quick schemes. Limiting your exposure to friends or social groups who play the comparison game is helpful as well. Remember, you become like the company you keep.
Become Financially Savvy- Work with a financial coach or financial advisor who can help you understand your budget, your investments and if you are on track to reach your money goals. Ask these experts also for recommendations for books, podcasts or classes at a local community college that can help you become more knowledgeable.
And most importantly, Don’t Stay Stuck, reach out to me.
And thank you for investing in yourself!
