When I was growing up, money was scarce. My father worked in a factory some of the time and my mother was a stay-at-home mom, so even when he was working there wasn’t a ton of money, and when he was laid off… things got tight. My father was a jack-of-all-trades and a pretty good small-scale commercial fisherman on the side, so we managed to muddle through. Scarcity was a real thing, though, especially when I was younger. (My father eventually moved up into a pretty stable position that paid well when I was older because he was willing to take on some training for a more complex job that some of his coworkers wouldn’t do.)
In my own professional life, there’s never been a situation where there wasn’t enough money coming in to keep the bills paid and food on the table. Scarcity isn’t something I’ve had to directly face.
Even given that, there is still sometimes an underlying internal sense of scarcity. It’s that fleeting sense of scarcity that convinces me to clean my plate even when I’m no longer hungry, or to stock up on some staples to a comically absurd level, or to have a strong desire to buy something on sale that I don’t really need because it might not ever be nearly that inexpensive gain.
It’s an interesting problem, and it’s one that I’m not alone in facing. My closest friend (that I’m not married to) has echoed the same type of feeling before. He grew up without much money, too, and those same feelings sometimes tap on his shoulder. It’s a feeling echoed by a few readers, too.
The Problem of Scarcity
Scarcity is this overarching sense that there is “not enough” in your life. It’s often connected to money, but it can connect to things like physical possessions, relationships, food, and countless other things in life.
Often, that internal sense of scarcity comes from a situation in life where there genuinely isn’t enough of something to go around. Maybe you experienced a situation as a child where your parents couldn’t pay the bills, or maybe as an adult you couldn’t make ends meet. Perhaps there wasn’t enough food in the house to put a reasonable dinner on the table. Perhaps you spent your teen years longing for just one new video game but there was never a situation where you could actually have that game.
However, the scarcity mindset goes beyond those situations and creates difficulty and poor choices even when there is plenty in your life. I’m overweight, but there are still times when I feel a strong sense of food scarcity and eat more than I should, for example. Someone who had trouble making ends meet for a while because of almost no income might still feel strongly driven to spend their whole check out of a sense of “scarcity.” Someone might be driven to be unethical at work because of a sense of “scarcity” of good work positions, even when there are plenty of jobs to go around.
In this article, I’m going to mostly focus on financial scarcity mindsets, but much of what I have to say applies to scarcity with regards to things like food on your plate and other aspects of life.
The “Echo” of Scarcity
As I alluded to above, while genuine scarcity may be a fact of life for some, the real challenge for many people is the persistent mindset of “scarcity.” Often, it’s an “echo” of earlier experience where they faced some type of genuine scarcity and it embedded a sense of continuing scarcity in their mind even when there’s enough to go around.
This idea of “scarcity,” and the counterbalancing idea of “abundance,” is a core idea of Stephen Covey’s book The 7 Habits of Highly Effective People. In that book, Covey describes scarcity:
Most people are deeply scripted in what I call the Scarcity Mentality. They see life as having only so much, as though there were only one pie out there. And if someone were to get a big piece of the pie, it would mean less for everybody else.
The Scarcity Mentality is the zero-sum paradigm of life. People with a Scarcity Mentality have a very difficult time sharing recognition and credit, power or profit – even with those who help in the production. The also have a a very hard time being genuinely happy for the success of other people.
And then, later, abundance:
The Abundance Mentality, on the other hand, flows out of a deep inner sense of personal worth and security. It is the paradigm that there is plenty out there and enough to spare for everybody. It results in sharing of prestige, of recognition, of profits, of decision making. It opens possibilities, options, alternatives, and creativity.
Scarcity is centered around the idea that there isn’t enough of something to cover what everyone needs or wants, so in order to ensure that you have enough to cover what you need or want, you’d better use what you have as soon as possible and guard your territory. This holds true for virtually every kind of resource: money, time, relationships, grades, recognition, credit, food on your plate, and on and on and on.
Abundance is centered around the idea that there is more than enough of that something for everyone to have what they need or want. Thus, there’s much less need to spend all of your money unless there’s a reason or to clean your plate unless you’re actually hungry. There’s much less reason to “fight” someone else for a good grade because you can both earn an A.
The thing is, in our modern and abundant world, actual scarcity is a pretty rare thing. Most Americans earn more than enough money to cover their needs and many wants.
Rather, many Americans feel an artificial sense of scarcity, particularly financial scarcity. The reason is that, although they have no trouble actually covering their basic needs, the wants of the average American often vastly exceed their income level and thus there’s this sense that we just don’t have enough money to live the life we want to live. That’s scarcity thinking, and it leads directly to the kind of behavior Covey describes above: “[p]eople with a Scarcity Mentality have a very difficult time sharing recognition and credit, power or profit – even with those who help in the production.”
In other words, when people feel financial scarcity, they tend to spend all of their money and are greedy for more. You can see this as a broader American trend: the average savings rate of Americans hovers around 2.4%, and that includes things like people who only contribute to their 401(k) up to the employer match. Also, 78% of Americans live paycheck to paycheck. That indicates that a lot of Americans are living as though they’re in scarcity, even though most of them aren’t and many more wouldn’t be with a little financial discipline.
The problem, of course, is that our brains are shouting “scarcity!” even when it’s not really present. We have to spend this money now because we might not get to spend it when we’re older. We want this thing now because it might not be available later. In both of those cases (and many more), we’re driven to foolish personal finance behavior.
I’m absolutely guilty of “scarcity” thinking at times. “Scarcity” thinking has steered me to spend more than I should, to eat more than I should, and so on.
However, I’ve found that there are a number of things a person can do to shut down “scarcity” thinking (at least to an extent) and to help prevent the worst excesses of it.
Strategy #1 – Short Term Self-Discipline
The most powerful tool to fight back against a scarcity mindset is to directly show yourself that the scarcity you perceive isn’t the reality of things and that abundance is the true face of the situation. How do you do that, though, if your natural instinct is generally toward scarcity? You fight back against it with discipline.
The thing is, self-discipline over a long period of time is hard to maintain. Setting some kind of new “rule” for your life sounds noble, but it doesn’t often work over the long haul.
This is especially true here when you’re simply trying to show yourself that the real picture of things is abundance. You don’t need the long haul for that. You just need enough time to see that something you thought of as “scarce” is actually abundant.
For me, the most effective way of doing this is a thirty day challenge. I simply pick a new rule by which to live my life and do it for thirty days. Usually, the purpose of that rule is to simply try out a life change or to see if something works or is actually true for myself.
If you’re trying to impress the idea of financial abundance into your life, frugality and thirty day challenges go together like bread and butter. There’s a nearly infinite array of thirty day challenges that a person can take on that will show you that, by putting a restriction of some kind on your finances, you can still get by and meet your needs and core wants with plenty left over.
For thirty days, I will make all of my meals at home.
For thirty days, I will not buy any books and will use the library if I want to read one I don’t have.
For thirty days, I won’t buy anything online.
For thirty days, I will eat leftovers for lunch.
For thirty days, I will write down every single dime I spend.
For thirty days, the only beverage I will drink will be water.
For thirty days, I will make my own coffee at home or at work and not visit a coffee shop.
I think you’re starting to get the idea. Use a thirty day challenge to nudge yourself into some kind of spending restriction and then see how life actually is when you apply that restriction. When you take it off, life will seem abundant, and it’ll stay that way if you stick with the new initiative.
Strategy #2 – Cut Your Media Diet
By this, I generally mean that you should strive to spend less time watching television, browsing websites, flipping through magazines, and reading social media. Cut those things out of your life as much as possible.
Why? Almost all of those things subtly encourage you in countless ways to buy into the idea of scarcity. They constantly nudge you with the idea that you should want more and more things and that people who have those things somehow have an inherently better life and that your life is inadequate if you don’t have those things. Much of the news media tends to nudge you with the idea that things are dangerous so you better grab onto everything you can grab because there may not be enough to go around. Social media seems to revolve heavily around arguing and looking at the public face of others and desiring things you do not have.
All of those things encourage and perpetuate a scarcity mindset. All of those things nudge people to believe that other people have more desirable things, that the world is an unsafe place, and that you need to consume and grab onto everything you can if you want to be safe and desirable and interesting.
Turn it off. Turn all of it off. Cancel your cable. Delete social media apps from your smartphone. You’ll be so much better off and you’ll find it so much easier to move away from scarcity thinking.
Strategy #3 – Setting Big Goals
It becomes much easier to stick with these new initiatives, though, if you set big goals for yourself and have something you’re working toward. Without some kind of general direction for your actions, it can be very easy to become complacent and fall back on earlier scarcity habits. On the other hand, with a goal, there is a reason beyond mere appreciation of abundance to continue on with your thirty day challenges.
What is it that you want to achieve in your future? Do you want to be free from debt? Practicing frugality and using the proceeds to make your debt melt away is a powerful example of abundant thinking at work. Do you want to have a secure retirement? Practicing frugality until abundance feels natural makes it so much easier to kick up those retirement savings. Do you want to own your own home? The same thing is true. Do you want your children to be able to go to college without the full burden of student loans? Again, the same thing is true.
Goals are much, much easier to achieve if you’ve set the stage with abundant thinking rather than scarcity thinking. If you go into a goal with a perspective of scarcity and see this goal as just another demand on a limited resource pool, it’s always going to be hard to achieve it. On the other hand, if you go into a goal with an understanding that there will always be resources available for the important things in life, it becomes much easier to achieve big goals.
For me, goal setting comes down to spending time thinking deeply about what’s actually important in my life. What matters the most here? What really makes my life worth living? What do I really want out of my life, both now and in the future? That kind of thinking really helps you figure out what’s important to you and helps you set big goals. In a very practical way, the most useful tool I’ve ever found for figuring out what I really valued and turning them into practical goals is the “three morning pages” journaling routine, where I sit down with a notebook and strive to fill three pages of it with whatever comes into my brain. This often turns into an exploration of what I truly care about and what I can do to manifest that in my life, which sets the stage for practical goal setting with goals that are really meaningful to me. When I have goals that are truly meaningful to me, I am strongly motivated to achieve them and I tend to hold onto the results of successful thirty day challenges if they help me move toward that goal in a real way.
Strategy #4 – Automation
Another powerful tool I’ve found is that of automation. When I am feeling very far toward the “abundant” end of the scale in terms of how I feel about my finances, I often set up automatic savings and investments that reflect that sense of abundance. I set up savings plans that are pretty aggressive because I have this strong sense that I have more than enough in life.
At other times, when I’m not feeling quite as “abundant,” those automatic rules still take effect and I still keep saving for my goals in an aggressive fashion. If I were making the decision as to how much to save in that single moment, I might not save nearly as much, or might not save anything at all. Instead, because of automation that I set up when I was feeling very abundant, I’m still going to save at the much more abundant rate. That’s a big win for me over the long haul.
Couldn’t I just override that automatic savings strategy? Sure, but the reality is that leaving automatic savings plans alone is the path of least resistance, and we all follow the path of least resistance in most aspects of life until something becomes deeply onerous. In other words, unless I did a complete 180 and suddenly utterly hated that savings plan, I’m very much likely to just leave it in place and deal with it. I might internally grumble a bit about how much was being whisked away into other savings and investing accounts, but I’m not likely to change it – that would take effort, and the path of least resistance causes me to leave things alone.
Over time, I find that automation like this slowly nudges me to think in a more abundant way. I see that my life is still good, yet I’m also able to march right toward financial goals. That gives a strong constant sense that there really is enough money to go around, and finances in general seem less stressful.
The key to all of this is understanding that a big part of our desire to spend and our feeling of not having “enough” comes from a scarcity mindset, a mindset that many of us were forced to have as a child and one that media perpetuates in our adulthood.
In reality, the vast majority of Americans have far more than they need and far more than enough to cover their basic wants. The trick is to not become obsessed with all of those lesser wants and let that cloud you from all of the things that you already have in your life.
For me, the four above strategies help, but, at the same time, scarcity thinking and abundance thinking are a spectrum and we all slide back and forth along that spectrum over time. Those strategies are meant to just nudge you a little closer to the “abundance” end of the spectrum most of the time, which, in my experience, leads to far better financial and life choices.