When it comes to your money mindset, there are a lot of things to consider. One of the biggest issues, points out our recent guest Amanda Abella, is the mindset that focuses on financial scarcity rather than financial abundance.
It can be difficult to overcome a scarcity mindset and move forward with your finances. However, it if you want to be successful, Abella points out, you need to work on focusing on abundance, and realizing that money doesn’t have to be scarce.
How Financial Scarcity Affects you
First of all, it’s important to note that financial scarcity isn’t just about your mindset, and the way you view money. There are some very real obstacles that come in your way when you are subject to financial scarcity.
A Harvard economist and recipient of the MacArthur Genius Award, Sendhil Mullainathan wondered why he had so much trouble renewing his car registration each year. He went through quite the rigamarole just because he felt he didn’t have enough time to take care of the task. However, all the consequences of not renewing the sticker ended up adding up to the point where he was in even worse shape, with even less time.
As a result of his experiences, he and Eldar Shafir did a little research, and then wrote about how scarcity affects our behavior and influences our decision-making process — including when it comes to money. The book is called Scarcity: Why Having Too Little Means So Much, and it explores what happens when you feel that your resources are scarce.
When you are in a scarcity mindset, it’s difficult to think about the big picture. You end up making short-term decisions for immediate relief, and you don’t have the resources to build long-term financial security. The results of this reality are shared in program on NPR:
Scarcity, whether of time or money, tends to focus the mind on immediate challenges. You stretch your budget to make ends meet. People in the grip of scarcity are tightly focused on meeting their urgent needs, but that focus comes at a price. Important things on the periphery get ignored.
As you can see, practically speaking, moving beyond the mindset of financial scarcity is difficult precisely because you are stuck trying to meet your survival needs. It’s really hard, psychologically, to get excited about setting aside money for retirement, or for some other savings goal far into the future, when you’re just trying to put food on the table.
It’s also hard to get pumped about starting your own business when you are exhausted from working two jobs just to stay in survival mode. In these situations, it’s no wonder that it’s easier to dream of a windfall that could give you some financial breathing room than it is to try and figure out how you’re going to make more money.
Overcoming financial scarcity isn’t just about “fixing” your money mindset. It’s also about looking at the physical reality of your situation, and addressing the difficulties you face head on.
Strategies for Overcoming Financial Scarcity
If you feel trapped in a financial scarcity mindset, here are a few strategies to help you move forward and improve your situation:
Acknowledge that Financial Resources Won’t Always Be Scarce
It’s difficult to move beyond a financial scarcity mindset when you feel like you will be stuck in your position. When I was staring at my credit card debt following my four-year degree, and my husband and I were getting ready to borrow (more) money for grad school, it was easy to become discouraged, sure that we would always be in the same place.
One of the first lessons I learned about about changing my money mindset, and moving beyond financial scarcity, was to realize that just because you’re in a tough place now, it doesn’t mean that you will always be in that place. It’s hard to move on from that place, but it can help you to look at your situation, and recognize that you won’t always be there.
Of course, you still need to make the effort, no matter where you are at. Just repeating that you won’t always be in the same position isn’t enough to pull you out. But you can avoid some of the despair that comes with feeling hopeless when you do your best to look on the bright side.
Figure Out How to Make Yourself More Marketable
One of the problems with a financial scarcity is that you have a hard time stepping back and figuring out what you can do to make yourself more marketable (and increase your earning power). This can help you boost your career prospects, as well as improve your earning ability. Whether it’s spending half an hour a day learning how to become a problem solver and reading about how others improve their earning power, or whether it’s giving up 90 minutes of TV each day to work on a business idea, see if you can make yourself more marketable.
Even if you need some sort of additional education to make the next move in your career, it’s possible to move forward. Look into your options in terms of online class, evening classes, and student aid to help you pay. Many degree programs, especially for professionals, are flexible enough that you might be able to work around your schedule. Even if you don’t need a college degree, getting a special certification, or acquiring some other skill, can help you position yourself to earn more money.
It’s difficult in some cases to overcome the systemic wealth inequality, but it is possible. But you need to try to carve out time to look for ways to make yourself more marketable.
Focus on One Thing at a Time
Do your best to get your finances in order. It’s difficult to get your finances in order when you are stuck in a mindset of financial scarcity, and it can be overwhelming. Instead of looking at how much you have to do, focus on one aspect of fixing your finances at a time. As the old saying goes, you should eat an elephant one bite at a time.
Look for a Support System
Finally, you can move forward better when you have a support system. When you are struggling with financial scarcity, you should see what community resources are available to help you. This can include church resources, food pantries, government resources, and family and friends. As long as you are willing to use this support to help you move forward and get your financial feet under you, this support can be a great help.
Also, don’t underestimate the help that can come from when you go online. There are online communities, blogs, message boards, and programs that can offer you support and direction so that you can get your finances in order and change your money mindset.
It’s not easy to move out of the financial scarcity mindset, and it’s easy to feel trapped. But it is possible.