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Note: This is a post from Adam Baker, founder of Man Vs. Debt.
Our instincts as animals constantly push us to embrace a scarcity mindset.
Do you know what I mean when I say “scarcity mindset”?
It’s the belief that “there’s not enough to go around.” That you need to protect, maintain, guard, defend, or hoard.
It’s basic survival-of-the-fittest.
It starts with a spark in our brains and then manifests itself in our attitudes and actions.
In its most dangerous form, the scarcity mindset can be the default way most of us deal with any situation that enters our life. Good or bad, we immediately turn to how it affects the limited supply of what we have.
Obviously, this isn’t a new discussion. People have been talking about Abundance vs. Scarcity for far longer than I’ve been on this planet. But I’ve been spending a lot of time thinking about it recently, as it’s starting to reveal itself as an issue in my own life.
3 years ago, we had an incredibly powerful scarcity mindset in our financial lives.
And, to be honest, I believe our scarcity mindset was an asset at this point in our lives. We needed it. We had been living unsustainably for a couple years and needed to ruthlessly focus on what we had, what was left, and where EXACTLY to put that extra money.
By leveraging this survival-of-the-fittest mindset we made some incredible strides in taking back control of our money.
But too much of the scarcity mindset can be poisonous.
Focusing through this “lens” for too long or too hard will cause you to become reaction-based, scared, stressed, and selfish.
Luckily for us, our travels throughout the world and my induction into this amazing blogging world helped radically jolt my perspective in this area. Slowly, but surely I began to realize that this isn’t a “zero-sum game.”
My eyes were opened to the possibilities that existed if I could (as my friend Chris Guillebeau says) increase the size of the pie for everyone.
No longer was there a limited supply of resources. No longer was there a fixed amount of income I could generate. No longer was there a fixed potential for what we could accomplish financially in our lifetime.
This was an extremely freeing time for us.
But I’ve realized that an abundance mindset is only really possible (and beneficial) when you actually have the breathing room t0 let it grow.
Let me use an example now. As our business has grown, I’ve picked up a couple team members. With these team members a vital part of this community and my business now – a positive thing – my overheard, expectations, and pressure to perform have all gone up exponentially as well.
This added pressure has generated stress, tightened our breathing room, and made things in general less flexible from a purely financial standpoint. As soon as we began to feel this restriction, our scarcity mindset began to creep back in.
Now, let me point out that intellectually I know this is part of growing any mission in the world. To grow, this is a necessary step along the way.
So the question is… how do you keep a mindset of abundance when times are financially tighter than others?
A scarcity mindset, within reason, can help us ensure we keep our focus. It can help us budget, plan, and forecast so we don’t implode by stepping on a financial landmine in the future. It can help us allocate our resources in the best way possible.
All of that is fantastic.
But in business, just like in life, we can’t completely lose sight of the abundance mindset that has made this incredible journey possible.
Can we?
I can’t confidently tell you I’ve found the balance, but at least we are aware of the issue. We’re still exploring.
When a scarcity mindset can help (based on my own life):
- When you first wake up (in life), leveraging a scarcity mindset to rapidly get yourself breathing room is extremely powerful. This is the basis of the passionate “war on debt” and battle against clutter we always talk about.
- Once you have sustainable breathing room, it’s important you don’t let the scarcity mindset poison your attitude and outlook. Focus on finding work you love or a mission you care about. This is the best way I know to show you just how abundant the possibilities really are.
- When you come across a growing pain or downswing, don’t immediately revert back to the scarcity mindset. Be conscious. Evaluate. Slow down.
Most importantly, just be conscious of this dynamic. Be able to enter into and out of these mindsets as you need them.
The scarcity mindset gets an incredibly bad rap from many people. But I know firsthand how powerful it can be in giving you that breathing room to make other dramatic life changes possible.
Are you stuck in a scarcity mindset right?
I’m interested on your own thoughts and experiences in this arena.
- Do you feel at times you’re stuck in a “there’s not enough to go around” mindset?
- Do you feel like it’s ever been beneficial in your life?
- How do you keep from snapping back into it whenever adversity pops back into your life?
Whether you share your answers or not, you need to answer these questions in your own life.
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I thought I had this figured out, but maybe not. I’ll keep you updated! 😉
Xoxoxo,
-Baker
Excellent post, Baker. As with so many things, either extreme is not good! Finding balance is the key … and challenging. Thanks!
Excellent post! And I agree a balance is the best – it’s something I’ve been trying to find for awhile now. For myself, I have to really think about where my money is going because I don’t have a lot of breathing room – a lot of the time I will sit and agonize over spending $20 on something I will actually use all the time because $20 is also a week and a half of gas. Whereas my boyfriend makes almost 3xs what I make and has plenty left over after savings and bills, he goes a little too far the other way. We both recognize finding a middle ground is the best for our relationship (who wants to fight about money?).
I appreciate that you’ve declined to hop on the all-abundance-all-the-time wagon. Unless there is some basis in reality, an abundance mindset can devolve to wishful thinking. It can keep you stuck while you wonder why, in spite of your abundance mindset, you are still struggling. Yet, as you say, getting stuck in a scarcity mindset is constricting. When you’re chronically afraid, creativity shuts down. You are less resilient. Less bold. And even your body suffers from prolonged anxiety.
For me, these principles have proven helpful.
1. When frightened, focus on the immediate moment. Are you okay right now, right this minute? Connecting with your fundamental, immediate okayness lessens anxiety and keeps you from freaking out.
2. When you’ve connected with that underlying okayness, assess your resources and liabilities. There is power in knowing what’s what, and that power is one part of a realistic abundance mindset.
3. Don’t fall for magical thinking or quick fixes. Be especially wary of those who would have you invest what you don’t have to effect a massive change. Leverage only works when there’s a basis for the fulcrum to rest on.
4. Be rigorous and take small steps. Rigor keeps you from veering too far into disaster planning or magical thinking–the ungrounded extremes of scarcity and abundance. Small steps keep you on track, moving you reliably toward your goal without freak out or burn out.
5. Get support. Form a group of friends and peers with whom you can share your game plan. Check in regularly with your intentions, priorities, and actions.
6. We’re always living in a story of some sort. Living in a pessimistic story leads to depression and paralysis. Choose an optimistic story, then decide what you need to do to make it come true.
The scarcity mindset can kill your risk-taking gene. You have the urge to start a money-making venture but you’re unwilling to invest in business cards, stationery, web-hosting, memberships, education, books, or whatever minimal expenses your venture requires, and you lose out on thousands of dollars that your venture could have potentially made. It’s helpful for couples to differentiate “luxuries” from “investments” so that they can free themselves up to spend in positive, strategic ways.
Absolutely agree. There is plenty of money and maybe enough resources (if we cut down a bit and double again in population) but we need to chill out and stop hoarding them. That happens on a micro level too in our daily lives.
Yes, my husband and I have wrestled with this for the past few years after both being laid off. He started a new career which would take several years before money was coming in regularly. Fortunately, we had inherited a bit of money, so we used that to make up the shortfall in our budget. It has been difficult to budget not knowing how much is coming in and when, especially knowing that available money is limited and could run out. We live “as if” but have had many conversations about when to spend and when to hold back. Still, we go out to eat weekly and take a yearly vacation. This year is the first year we started out with money in the bank, enough to last for about 4 months, and anticipate one of our best years ever. I think it’s important for money to “flow” in and out of your life to create an abundance mindset. There have been moments of fear, but as Molly says, we focus on the fact that we are okay for now, and things usually do work out.
Maybe this is all coming down to semantics here, but personally I don’t see having an “abundance mindset” as feeling the world is so abundant that you’re fiscally irresponsible. And if you begin to enter a phase when money isn’t flowing and you start to recognize that you need to make some spending adjustments and cut back doesn’t — to my mind — mean you’re embracing a “scarcity mindset.”
From my own experience I know when I’m suffering from a scarcity mind set because I start to feel contracted, stressed and start to make business decisions based in fear instead of sound business principles and with a Vision of the potential of intelligent use of current resources (aka money).
I don’t feel you can achieve success making choices fueled with a scarcity mind set; an abundance mind set is fueled by your Vision and brings about expansion within and without as our business grows. When our business is threatened by external forces it is our abundance mins set that allows us to recognize the opportunity in adversity, whereas if we start to embrace scarcity, we simply become reactive to what is happening which usually leads to contraction and a sort of “battening down the hatches and waiting out the storm” view instead of seeing additional opportunities to make our business grow. This is what is happening the world over right now; everyone is contracted and the economy is in tatters, while at the same time certain individuals with their eyes open for opportunity are amassing more wealth. (Naturally those living in fear and scarcity see these people as “the enemy” who are greedily taking advantage of the economic situation.)
I relate to this so much- I’m 21 years old, and until a few months ago, I was still paying off debt I had acquired through some pretty questionable means. I lived $1,000 in the red for a year or so (the guy I borrowed it from didn’t pester me for it back, but it was always a weight on my mind). Paying it back was a huge relief.
In the time since then, I’ve saved about $2,000. It feels like I should be loosening up a bit, and investing some of that money in myself- but the “starvation” mode- or scarcity mindset- has sort of stuck with me. I’m used to constantly thinking that I can’t afford anything, that I can’t do this or that.
I like what one of the Sethi guys said about conscious, mindful spending. If something’s worth spending money on, to you, then you should do it.
Thanks for writing this, Baker!
Actually I think a poker analogy works great here- a scarcity mindset is kind of like a tight-fisted strategy, where you refuse to play almost every hand you get, because it’s not good enough. The opposite would be to be loose-handed- to play every single hand, good or bad.
I suppose the abundance mindset is close to the ideal poker strategy- tight and aggressive. You don’t play every hand, but when you find a hand you’re satisfied with, you play the hell out of it.
There’s a sort of phase-cycling wisdom to it, summer and winter, negative and positive, bulk and cut, tight and aggressive, scarce and abundant, yin and yang.
One without the other is incomplete.
Om~~~
Hahaha.
-Visa
Actually poker is an awesome analogy. I knew a guy that was a poker pro and he’d show up early in the AM to clean out the players that had been sitting there all night. They had already lost a ton and they were desperate to recoup their losses. They made very stupid decisions from their desperate “scarcity mind set.”
I love your blog. I just recently discovered it and I am enjoying reading your older entries – I think what you are writing about is important.
It seems to me that the scarcity mindset is promoted very heavily by media – either with scary news or ads to buy stuff. It’s nearly a point of enlightenment to realize that there are other ways to think about life.
Whenever I get overwhelmed with feelings of scarcity, I try to remember a point made by James Schall, who said that humanity does not suffer from a lack of resources, but from the knowledge to use the resources it has. This makes me step back and reinspect the situation I am confronting to see if maybe I could be smarter about it, rather than worrying about protecting/hoarding my stuff.
for a long time i suffered from the opposite: money can always be earned but life is short so live it up while you can. i’m having to learn to be a bit more of the “scarcity mindset” but it is terribly difficult not to overdo it. no one wants to be Scrooge 🙂 i’m hopeful that once i’m out of debt completely and have officially learned proper planning that there won’t be any need for a scarcity mindset either for it’s good or bad qualities. here’s hoping!
Budget with a scarcity outlook, Fuel the yearn to earn with the abundance outlook. There are lot’s of dollars falling off the money tree. We just need to get out our rakes and gather it up.
Great post. Thanks for the great information. I am slowly but surely making some changes to change my mindset for the better.
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I don´t think your mindset changes because things change… after all the mindset goes beyond money issues…
I agree you may have to start a action plan, an emergency one sometimes regarding money issues, but it doens´t need to change your mindset.
If you step back a little you can see the mindset form a spiritual point of view and it´s always abundance. Sometimes you just have to act in a constrain way from a material, practical point of view. Hopefully temporarily but the mindset stays the same.
That certanty anchor is great on decreasing stress.
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When I was younger, I suffered from a Scarcity Mindset in the worst way. Our finances were so tight that I felt I needed it just to survive. One day, I realized it would be a lot more efficient (and fun) to increase my income, instead of obsessing on expenses. It happened quickly after that and I was able quadruple my income.
Love this! I really try to keep this mindset front and center in my decision making. It’s rare that I see other people writing/talking about it! It’s been awhile since I’ve been a regular reader of MVD and I’m excited to be back and see an awesome post like this!