How Overcoming a Scarcity Mindset Will Lead You to Financial Freedom
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Do you dream of going on an epic vacation but tell yourself you could never afford it, so why bother dreaming?
Or maybe you want a promotion at work but don’t think your boss would give it to you, so you never ask.
These are examples of a scarcity mindset, and they impact your personal and financial growth. In fact, if you’re living life using a scarcity mindset, you’re leaving money on the table.
What Is a Scarcity Mindset?
Scarcity mindsets are mindsets that operate out of fear and the belief that there’s not enough for everyone, so there must not be enough for you. They’re limiting mindsets, and they take a lot of effort to work through.
What Causes a Scarcity Mindset?
A scarcity mindset can develop from almost any past experience. You might have a scarcity mindset from your parents, your culture, your religion, your society, or specific traumatic events in your life.
Here are some of the main triggers.
A huge reason why we have a scarcity mindset is because we have low self-worth. If we believe the worst about ourselves, we don’t see why others don’t believe that as well. We create narratives about ourselves that stem from our inability to believe in ourselves, not from the truth of who we are as people.
Learning to flip the script and find places where we acknowledge our worth is instrumental in changing the narrative and focusing on an abundance mindset.
We’re uncomfortable with wealth
Those of us who grew up poor or middle class might have been raised with the narrative that those with wealth are out of touch with society or are rude or mean. Whatever the story, we believe that being wealthy is wrong and will prevent us from living a happy life. So we don’t strive for wealth.
Learning to be comfortable with all walks of life will help you overcome this roadblock to financial freedom. Being rich isn’t wrong.
Lack of financial education
A lack of financial education can cause us to believe that money is limited and that, if you grew up poor, you have to be poor your entire life. But that isn’t the case! You can help to break the cycle of poverty by teaching yourself about finances, living frugally, and relentlessly attacking your financial goals head-on.
To learn more about how to break the cycle of poverty and gain financial independence, check out our new course, Financial Freedom in Uncertain Times.
We might have had adverse experiences in the past that caused us to develop a scarcity mindset. If you were rejected from a promotion once, it might lead you to believe you’re never worthy of a promotion. You might stop trying to further your career because you don’t want to feel rejection again.
Those beliefs might protect your feelings, but they aren’t going to help you grow as a person. It’s important to continuously challenge yourself.
Dangers of a Scarcity Mindset
Scarcity mindsets can cause us to self-sabotage good opportunities because we don’t believe that we are good enough. We let limiting beliefs we have about ourselves be represented as absolute truth. And we base our decisions on that truth.
If you believe that you’re not responsible enough to get the promotion at work, you’re going to act that way and lose your chance. It’s not that you weren’t responsible. It’s that you believed you weren’t responsible, and that turned into a self-fulfilling prophecy.
You can do this with your money as well. A common limiting belief is that you’re bad with money. This creates a roadblock between you and your money. You don’t take the time to get good with money because you believe that you’re bad with money. This stops you from making financial gains that could set you up for greater financial success.
How to Fight Against the Scarcity Mindset
It’s important to ensure that you’re not living your life from a scarcity mindset. If you do, you’ll give up plenty of opportunities that lead to financial freedom. And scarcity mindsets harm you more than they help you.
The first step to stopping a scarcity mindset is recognizing when you have one. It can be hard to recognize a limiting belief if you’re not looking for it. Keep an eye out for negative self-talk and notice when you say no to yourself before you’ve gone after something. These are all hallmarks of a scarcity mindset.
Honor your feelings
When you notice yourself using a scarcity mindset, ask yourself if there’s a way to reframe the belief.
Say you aren’t saving money because you’re worried about missing out. That’s a scarcity mindset that could damage your future financial self.
It’s completely understandable to struggle to save money when your friends have tickets to a really cool concert and you want to go with them. But always capitulating because you’re worried you’ll never have the chance again threatens your future financial health.
Instead, consider creating a FOMO budget item so you can responsibly save for these once-in-a-lifetime moments. That way, you honor the feeling that you don’t want to miss out, but you keep your spending in check and can also save for future goals, like financial independence.
Honoring your feelings while not letting them overwhelm your beliefs is the huge first step of overcoming a scarcity mindset.
Because we feel scared about something for a reason — whether it’s self-preservation or a lack of self-confidence — just ignoring our feelings isn’t going to make the problem go away. You have to give yourself space to work through them.
Find ways to embrace an abundance mindset
However, sometimes you shouldn’t honor the feeling. If you believe that you’re not good enough at writing to make $100,000 in a year, it might be helpful to take another approach and practice an abundance mindset.
You have an abundance mindset when you believe there’s enough to go around. You believe that money is limitless and that you can reach your goals.
Say you have a goal to make $100,000 by freelancing, but you don’t think you’re good enough to make that much. Instead of leaning into this negative self-talk, see if you can reframe it in another way.
For instance, you could say, “While I might not believe in myself right now, I’m capable of making $100,000 this year. And there are enough projects in the world to be able to do that.” This honors your feelings of disbelief but reminds you of the truth that you can do anything you set your mind to.
An abundance mindset is simply about embracing the best part of yourself, even when you don’t feel like it. It’s a hard practice to start, but it can definitely help you achieve financial freedom.
Your mental health will thank you
So much of mental health is caught up in self-identity. An abundance mindset is better for your mental health. And scarcity beliefs are generally negative beliefs about ourselves.
When we choose to push past what we currently believe about ourselves and find the truth that’s in the world — the truth being that we are more than enough and that we can accomplish what we set our minds to — we choose the best parts of ourselves.
It’s a hard adjustment, for sure. But it’s one that can only benefit you.
How Defeating a Scarcity Mindset Will Push You Toward Financial Independence
Scarcity mindsets and limiting beliefs can stop us from living our best financial lives. Instead of embracing the infinite possibilities that money can provide us, we instead react to life from a place of fear and misunderstanding of the world. This doesn’t set us up for financial success.
A goal like financial independence, for which you have to amass somewhere between $500,000 and $2 million, will seem impossible with a scarcity mindset.
“There’s no possible way to achieve that,” you’ll say to yourself. “So why bother trying?”
But in fact, it is possible. And plenty of people have done it.
If you push yourself to believe that financial independence is possible, you can accomplish it. Financial independence might take decades, and you might not have one of the quick-and-dirty success stories that are so popular on social media.
But you’ll have worked through your scarcity mentality and shown it who’s boss.