Your mentality has a major impact on your lifestyle – this is especially true for your finances! In this article, I’ll review the difference between an abundance mindset vs scarcity mentality and what it means for you and your money. As a money-saving expert who has worked hard to develop an abundance mindset through frugal living, mindful spending practices and other smart practices, I’ll share my top tips on how you can do the same.
Read on to learn about an abundance mentality vs scarcity mentality and money.
Exploring the Scarcity Mentality
What is a Scarcity Mentality?
Scarcity is the opposite of abundance. A scarcity mindset mindset is a mentality when one thinks there is never enough. A person with a scarcity mindset is so focused on the belief that there is never enough that it makes it difficult for them to concentrate on anything else.
A person with a scarcity mindset can focus on different things such as the fact that there isn’t enough time, work, or resources to parent adequately. Millions of people around the world truthfully do not have enough money, time or resources due to poverty. However, those with a scarcity mindset do have access to enough resources but simply have a negative mindset. This mindset can be due to a variety of factors such as:
- Upbringing
- Past financial situation
- Personality
- Current financial situation
- Social circle
- Obligations and your schedule
Signs You Might Have a Scarcity Mindset Surrounding Your Finances
Now that I’ve defined what a scarcity mindset is, let’s get into the top ways you find out whether or not you may have a scarcity mindset.
Constant Worry About Money
If you constantly worry about money, you may have a scarcity mindset. As I mentioned earlier in this post, many have to worry about money and have no choice to due to being on a single income, underemployment, unemployment or poverty. However, if you are in a stable financial situation yet find yourself worrying about money, you may have a scarcity mindset.
Comparison with Others
When your friend goes on a big vacation or buys the latest iPhone, do you feel like the green-eyed monster? Even if you don’t feel jealous, do you feel less satisfied with your weekend getaway or three-year-old smartphone than you did last week? It’s natural for human beings to compare themselves to others. However, if you are in a constant state of comparison and thinking about how much more your friends or peers have, you may have a scarcity mindset.
Feeling Superior in Success
When you receive a performance award at work or purchase a new home, do you feel overly superior? While there’s nothing wrong with feeling proud of your accomplishments, overly focusing and bragging about success could be a sign that you have a scarcity mindset.
Negative Thoughts About Goals
Goals are important. They keep our mindsets positive, and our motivations high and help us work towards something. Many people with a scarcity mindset may feel negative about setting goals or poorly about goals they’ve already set. When I was living with a scarcity mindset, I had set a goal, yet felt pessimistic about achieving it, even though it was relatively realistic (saving 50% per month of my income instead of my previous ability to save 30%).
Patterns of Overindulgence or Under-indulgence
Those with a scarcity mindset often go to one extreme or another. Regarding finances, they often engage in patterns of overspending or underspending. For example, they may refuse to spend money on a small outing or expense such as splitting the bill for takeout pizza or going out for a couple of drinks. However, that very same week, they will spend hundreds of dollars on pet toys or hair treatments.
The Detrimental Effects of Constantly Worrying About Finances
A scarcity mindset can have many negative impacts. Firstly, it can have a negative impact on your mood. When I had a scarcity mindset regarding my finances, I always felt worried and anxious about money. Some other negative impacts of a scarcity mindset include:
- Strained relationships – when you’re cheap and refuse to spend money, you will miss out on social events. There’s nothing wrong with being frugal and smart by choosing free or low-cost activities. However, if you refuse to spend money on the occasional dinner, birthday present or coffee with a friend, you may start getting into conflict with them. Eventually, you may stop being invited to events altogether.
- Risky behaviors – being cheap often means cutting corners. Cheap people with a scarcity mindset may refuse to buy products or services they need and will risk their safety. For example, a person with a scarcity mindset living in a place that gets a lot of snow in the winter may refuse to switch to winter tires from all-season tires and risk getting in a car accident.
The Benefits of an Abundance Mentality with Finances
Well, enough focus on the negative side of an abundance mentality vs scarcity mentality. Now, what are the benefits of being the opposite of scarce – also known as having an abundance mindset? You’ll be glad to know that an abundance mindset means many positive things:
- A clearer picture of your financial goals
- Stronger relationships with your loved ones and yourself
- Decreased stress and anxiety surrounding your finances
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Embracing a Positive Money Mindset
Defining an Abundance Mindset
An abundance mindset is one where you believe that there are always enough resources – financial, social, time or other. Those with this mindset never worry about whether or not there is enough food in their fridge, time to complete essential tasks such as housekeeping or childcare, and money to pay the bills.
Cultivating a Mentality of Having Enough
Now you know the difference between an abundance mentality vs scarcity mentality and are motivated to move towards an abundance mindset – great! Below are the top six steps you should take to cultivate an abundance mindset.
1. Be Thankful for What You Have
Being thankful for what you have is the number one way to move towards an abundance mindset. Focusing on what I already have has been immensely helpful and has shown me the abundance of things and people I have. Below are some examples of the ways I’ve shifted my mindset from something to complain about to something I’m grateful for:
Work
- Old mindset – “I have so much work to do!”
- New mindset – “I’m thankful to have work that I enjoy, supportive coworkers, a great manager and a job that puts food on the table.”
Traffic
- Old mindset – “The traffic is so heavy today – I hate commuting to work.”
- New mindset – “I’m thankful to have a reliable method of transportation to get to work.”
Grocery Shopping
- Old mindset – “I hate making a list and going grocery shopping, it’s so much work!”
- New mindset – “I’m thankful to have money to shop for food I enjoy cooking and eating.”
Household Chores
- Old mindset – “Dusting, mopping and doing laundry is so much work; I hate it!”
- New mindset – ” I’m thankful for a messy house – it means I have a place to live and clothes to wear.”
Did any of the above complaints resonate with you? They’re pretty common ones. Think about one thing or situation you’ve complained about this week. Next, think about how you can shift your mindset to one of gratitude and abundance. Seeing things in a positive light has helped me stay motivated to achieve my financial goals. When I’m happier, I have more energy to work on upgrading my skills or taking on side jobs.
2. Find Joy in the Small Things
This one might be cliché, but it’s popular advice for a reason! Focusing on life’s simple pleasures is another way to reframe your mindset. Grab a notebook and pen and sit down on the couch. Turn off all distractions including shutting off the TV, turning your phone to ‘silent’ mode, and putting on some relaxing music. Take some time to write down 10-15 small things you can do in the next week that will bring you joy. Some examples of simple pleasures or small joys I focus on include:
- Brewing a cup of coffee in the morning and sipping it slowly while sitting on my balcony
- Slowly opening the blinds in the morning and letting the sunlight pour through my window
- Enjoying a manicure or pedicure at home
- Savoring a piece (or three!) of dark chocolate after a long day
- Cooking a delicious new dish that I’ve been dying to make for the longest time
3. Surround Yourself with Likeminded People
Who you surround yourself with has a huge impact on your health and well-being – financial or otherwise. I have several close friends who are incredibly motivated in their careers, fitness, and hobbies. My friends and I inspire each other to continually upgrade our skills, maintain a healthy diet and robust fitness regime, and engage in meaningful activities that bring us joy. Find a trusted friend with whom you can be accountable for developing an abundance mindset. Meet once a week or so for coffee or lunch and talk about your progress. Ask each other questions such as:
- “How are you feeling about your finances this week – are you worried or confident?”
- “What simple joy or pleasure did you focus on this week?”
- “What setbacks did you face?”
When you hold yourself accountable with a trusted friend, you’ll be motivated to stay on track. It won’t just be you motivating you!
4. Learn from Setbacks
Let’s be honest – everyone makes mistakes. Moving from a scarcity mindset to an abundance mindset is a huge amount of work – this is especially true if you’re reversing a lifetime of bad habits. It’s natural to occasionally move back into a scarcity mindset! Forgive yourself for occasionally becoming fearful, overspending or underspending – then move forward from your mistakes.
5. Identify Triggers and Overcome Them
One major way I’ve overcome setbacks has been by identifying, recording and working on my triggers. Think about some ways you may become triggered. To give you some ideas, some of my triggers and courses of action include:
- Losing a freelance client or money on a project – take on additional streams of income as a security blanket in case I lose a large amount of freelance work at once
- An unexpected expense wiping out part of my emergency savings such as an unexpected laptop repair or medical bill – stock 3-6 months’ worth of living expenses and additional emergency funds for one-off emergencies
- Failing to budget for the upcoming month’s one-off expenses (for example, an annual subscription payment) and wiping out my savings for the month – identify annual expenses and factor them into your budget by creating a line item in your budget or saving additional funds throughout to year in a separate savings account (the latter personally works best for me).
6. Affirm and Acknowledge Your Self-Worth
It doesn’t matter your situation, personality or tendencies – you are enough! When you focus on your inherent self-worth, you’ll understand that you are worth it. All that time spent working towards a life of abundance is worth the joy you’ll experience. You deserve happiness and fulfillment in your life. When I keep this daily reminder at the top of my mind, I stay motivated to keep going and stay on track with my goals.
Mindful Spending and an Abundance Mindset
Aside from practical steps to move towards an abundance mindset, practicing mindful spending is a huge component of setting yourself up for financial success. Before you spend money, ask yourself:
- “Do I need this?”
- “If I don’t need this, does it fit into my budget or will it bring me joy?”
When you practice mindful spending, you’ll sink your hard-earned cash on stuff and experiences that matter to you. Additionally, you’ll be a lot less likely to practice impulse spending and experience buyer’s remorse.
A Final Word on Developing an Abundance Mindset In Your Financial Life
There you have it – your guide to an abundance mentality vs scarcity mentality. I hope this guide has been helpful in aiding you to develop a healthier relationship with your finances, your loved ones, and yourself!
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Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
