Poverty can often be a result of circumstances outside of our control, from low wages to limited opportunities. They undeniably have an influence on our ability to grow our wealth, but there’s also a hidden, internal force that keeps most of us in lower financial standing: a scarcity mindset. It shapes our choices and locks us into a cycle, but what is a scarcity mindset? And how do you break it?
Breaking the poverty cycle is about shifting from a mindset of scarcity to abundance. Instead of focusing on what you don’t have, alter your thinking to focus on your potential and the opportunities available to you.
Shift from a scarcity mindset to an abundance mindset by:
- Looking for opportunities for growth.
- Setting clear financial goals.
- Allowing yourself to enjoy the money you have already.
In this blog, we’ll go into more detail about a scarcity mindset, why it’s sabotaging your finances, and how to shift into a different perspective.
What Is A Scarcity Mindset?
Put simply, a scarcity mindset is a pattern of thinking that focuses on what we don’t have. For many of us, this is reinforced by the belief that we’ll never have the things we want, even if our basic needs, like food, water, and housing, are covered.
A scarcity mindset will often lead to an increase in worry and fear, leaving us stressed that there will never be enough money to meet our needs. Seeing others succeed can intensify this, leaving us with the thought that, since another person has grown their wealth, there’s less for us to access.
What Causes A Scarcity Mindset?
A scarcity mindset is often caused by past experiences or societal influences. Uncovering the root cause of your scarcity mindset for money is going to help you tackle your thinking and move in a positive direction.
Previous financial instability, career setbacks, or even social media can all influence our attitude towards money and what we already have. We begin to anticipate issues and make decisions that help us to prepare for what we view as inevitable issues, even if this is not realistic.
Financial Instability
It’s common for those who have previously experienced financial instability to have a scarcity mindset. For example, if you grew up in a household whose opportunities were limited by scarcity, you’re likely to carry this mindset into your adult life.
If you grew up experiencing financial instability, then you’re likely to become overly frugal and avoid taking any financial risks, even if doing so has the potential to grow your wealth. You might also find it difficult to make long-term plans for your money, like buying a home, because your mind is preoccupied with survival in the immediate future.
Career Setbacks
No matter what kind of career setbacks you’ve faced, whether it’s redundancy or missing out on a promotion, you’ll often make decisions with your money that make you feel prepared if it ever happens again. You’ll stop taking risks in your career and avoid opportunities out of fear of failure.
Going for a promotion or upskilling into an entirely new skillset might be uncertain, but it can provide you with the chance to earn more and grow in your professional life.
Social Media
We often see a scarcity mindset play out on social media, with a constant comparison between our own lives and those of others. We’re exposed to perfectly curated portrayals of other people’s lives, making what we have currently feel inadequate.
We’ll often compare ourselves to these unrealistic expectations, enforcing the belief that we’re not successful, wealthy, or happy enough, even if we have everything we need to live comfortably.
News And Mainstream Media
The news and mainstream media can also often reinforce the idea that we’ll never have enough. A scarcity mindset forces us to believe that the world’s opportunities and resources are limited, and the constant negative events focused on by the news only encourage this.
The media influences what we see on social media, too, so it’s likely that most of what we consume on a daily basis highlights crises in the world and tells us we need to brace for impact.
How Does A Scarcity Mindset Sabotage Financial Progress?
A scarcity mindset has negative influences across all aspects of our lives, all related to the way we view our own finances. It creates a constant feeling of fear and anxiety, which can lead us to several decisions that sabotage our financial progress.
Risk Aversion
We often fear the loss of what we already have, especially if we view ourselves as barely living as it is. This scarcity money mindset can make us reluctant to reach for financial growth.
For example, you might avoid pursuing a more lucrative career path or learning how to invest and grow your money because of the fear that you might not succeed the first time.
Risk aversion limits our earning potential and prevents us from seizing opportunities that could create a significant amount of wealth for us.
Spending Control
A scarcity mindset makes us believe that there isn’t enough money to go around. This often leads us to make extreme saving decisions or deny ourselves experiences because of their perceived impact on our ability to survive.
Previous experiences of poverty can exacerbate this, but can also lead us to impulse spending. When we haven’t experienced luxuries in the past and continue to see money as a limited resource, we’re likely to splash out on expensive purchases when we gain a bit of extra money, rather than saving or investing it.
Avoidance Of Long-Term Planning
A scarcity mindset forces us to focus on our immediate needs and also often creates a fear of potential financial loss in the future. This often leads to the neglect of long-term planning, such as saving for a house or creating an investment strategy.
Putting some of what you perceive as the little money you have aside for a currently intangible goal can seem ridiculous when you need to survive. But, in fact, if you’re meeting your everyday needs and are living comfortably, you’ll only make progress by having these future goals in mind.
Career Stagnation
Whether it’s scaling up your own business or advancing in your career, a scarcity money mindset can prevent us from taking the steps to grow our wealth. When we view money as a limited resource for both ourselves and others, we avoid asking for more in case we’re rejected, but we also don’t value ourselves at the right price for our services or skills.
Financial progression might involve hiring staff, investing in upskilling, or raising your prices, which can all seem risky and could possibly backfire. Ultimately, we need to take risks to progress, and moving past our scarcity mindset plays a big part in doing so.
How Can We Shift Toward Abundance Thinking?
Moving on from a scarcity mindset isn’t about making unbelievably risky decisions or spending money as soon as you earn it; it’s about finding balance. You need to enjoy what you currently have, whilst staying open to opportunities to grow your wealth.
Scarcity Mindset vs Abundance Mindset
An abundance mindset differs from scarcity in the sense that it focuses on the belief that there is enough money to go around and that there’s always an opportunity for more.
With an abundance mindset vs a scarcity mindset, you’re much more likely to appreciate what you have, whilst still approaching your financial opportunities with hope, rather than seeing the potential of failure. The success of others is no longer taking away potential earnings from you; it’s giving an example of success and can provide goals for your future.
Steps To Move Into An Abundant Money Mindset
It’s one thing to understand the concept of an abundance mindset, but you’ll need to make changes to your everyday actions to truly see the difference it can make to your financial progress.
1. Shift Your Money Mindset
Moving towards an abundance mindset begins by changing the way you think about your money. Instead of thinking about your money as a source of stress or a limitation to opportunities, recognise it as a tool for growth and experience.
Take daily challenges of “I can’t afford this” and turn them into opportunities to grow by thinking, “How do I make this possible?”.
2. Look For Opportunities For Growth
In order to grow your finances, you need to stay open to new opportunities and income streams, like investments or the development of new skills. It’s easy to think about all the ways that you could fail, but growth comes from the ability to ask yourself, “What can this teach me?”, rather than fearing the potential setbacks.
Begin building the daily habit of looking for possibilities in every area of your life, whether it’s reaching for career progression, starting a new side hustle, or investing in your own personal development.
3. Set Clear Goals
To really measure your financial growth, you’ll first need to define what success looks like for you. Do you want to save for a home, build an emergency fund, or have enough spare money to start investing?
Then, break down these goals into manageable and measurable steps, like a monthly saving target, a debt repayment schedule, or milestones for your investment strategy. This allows you to track your progress and remain motivated by the short-term success of your long-term goal.
4. Practice Financial Gratitude
A big part of the abundance mindset is to acknowledge your current finances and what they allow you to do, from having a roof over your head to a takeaway treat. Then, make sure you still budget for moments of joy. Set money aside for small luxuries or fun experiences, doing so without guilt as long as you’re meeting your basic needs.
The difference between a scarcity mindset vs abundance mindset:
- Scarcity: “I’ll never have enough money to do that.”
- Abundance: “I can still enjoy my life whilst building my wealth.”
5. Surround Yourself With Good Influences
Take some time to learn from people who already think positively about money, from books, podcasts and even mentorships.
Avoid environments that will reinforce negative feelings, fear, and the need to compare yourself to others. This could include reassessing who you follow on social media or making a conscious effort to consume less negative news.
6. Reinforce Your Mindset With Actions
Once you’ve made all of the mental changes, it’s time to back this up with everyday actions to keep abundance at the forefront of your mind.
- Automate the process of moving money into investments or savings so your growth can happen consistently without effort.
- Celebrate the small wins, like reaching milestones, to build your confidence and maintain momentum.
- Keep reviewing and adjusting your goals, and your opportunities expand.
Break Your Scarcity Mindset With STARTrading
Are you ready to shift from a scarcity mindset to a focus on abundance in your financial journey? The swing trading courses available here at STARTrading are designed to help you spot growth opportunities, set achievable goals, and enjoy life to its fullest potential.
Book your place below today and take the first step towards an abundance mindset that leads you to financial freedom.
