Why A Scarcity Mindset Is Harmful to Your Finances

scarcity mindset

I’ll be honest here: when it comes to money, I operate from a scarcity mindset. I have been for awhile, and I’ve come to realize that it’s holding me back financially. It’s time to start making some changes so that I can grow personally and financially. So let’s talk about scarcity mindsets and how to beat them!

How can you know if you have a scarcity mindset? Well first, let’s define what one is.

A scarcity mindset is the belief that there isn’t enough of something. Whether it’s money or something else like food or time, you make decisions based on the fear of there not being enough of that thing. 

When you’re operating from a scarcity mindset, you make decisions in a vacuum. All you can see is that there won’t be enough. You hone in on that and let that be the whole truth of the situation. If you believe that you don’t make enough money to pay for entertainment, you’ll turn down every opportunity to get drinks with friends, travel or attend a networking event that has a ticket.

You’ll do these things in the name of saving money, but you could be doing more harm than good. That was the case for me- or rather, it still is the case for me.

This is how I’ve been operating with money for the past couple years, and it’s time to stop.

First of all, it’s just no longer true. After paying off my loans, I have never been unable to pay all my monthly bills. I’ve always had food to eat, a place to live, and money to live my life. My scarcity mindset comes from my belief that my savings and investments aren’t big enough. That in one fell swoop, everything could be taken from me.

Constantly operating from a place of fear means you cling to what you currently have instead of reaching for more. I still work a rather low paying side hustle because I’m afraid to let it go and take the time to look for something higher paying. My scarcity mindset tells me: ‘better to count on what you do have rather than take a risk and lose everything.’

When you refuse to take risks, you refuse to grow. You miss opportunities. Plus, you live in a world where you’ve settled. You find something that works well enough, even if you do stress out a bit. And then you stay there. You maintain stasis.

Now, it’s fine to maintain stasis if you’re actually happy. If you’re low-key stressed out all the time, why would you maintain that?

Beating the scarcity mindset requires shifting gears into an abundancy mindset. In order to do that I need to:

-Change my language. Instead of saying ‘I can’t afford that,’ which reinforces my belief that I don’t have enough money, I need to use words of abundance. Saying ‘I can afford it, but I choose not to buy it,’ or ‘that’s not my priority,’ are both ways of empowering myself and saving more money.

-Stop the comparisons. I am me and only me. I am not obligated to live life like others. Just because I am in a different spot than someone else doesn’t mean I am in a bad spot. I need to internalize this and understand it in my core.

-Be more generous. With everything: my time, my energy, my goodwill. Believing that money is in short supply can lead me to focus on myself and my own needs. I want to look beyond myself and help others. In doing so I beat my scarcity mindset at its own game.

Do you have a scarcity mindset? Do you feel that there is not enough of something in your life?

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