Scarcity Mindset: What It Is, Causes, & How to Overcome It

What Is a Scarcity Mindset?

A scarcity mindset is an outlook on life that focuses on a lack of resources which must be conserved and used strategically. Thus, they are likely to become extremely possessive of their belongings and experience signs of money anxiety. In contrast, an abundance mindset is an attitude of optimism that concludes there is enough of everything to go around.

Below are signs of a scarcity mindset:

• Waiting to pay bills until the last minute: People with a scarcity mindset often wait to pay their bills until the last minute because they are afraid of running out of money. They may have a general belief that there is not enough money to go around and if they spend their money now, they won’t have enough to cover their needs later.
• Overscheduling yourself: Those with a scarcity mindset may feel as though there are not enough hours in the day to take advantage of all the chances that come their way, so they try to squeeze as much as possible into their schedule. This can lead to overscheduling, overwhelm, and stress.
• Fear of loss: People with a scarcity mindset often have a fear of losing what they have, whether it’s money, resources, relationships, or opportunities. This fear can lead to a lack of trust in others and an unwillingness to take risks to achieve success.
• Overly self-reliant: Individuals with a scarcity mentality are often overly self-reliant, believing that they can only depend on themselves to get what they need. This can lead to feelings of loneliness and isolation.
• Fear of failure: People with a scarcity mindset are often overly concerned about failure, believing that if they fail, they won’t have enough resources to try again. This can become a self-fulfilling prophecy as they take self-defeating actions such as no longer making an effort because of the fear of failure.
• Perfectionism: Those with a scarcity mindset are often perfectionists, believing that anything less than perfect isn’t good enough. This can lead to procrastination and a fear of taking risks, as well as an inability to see the bigger picture.
• Rushing to make decisions: A scarcity mentality can result in one making decisions without considering the long-term implications of their choices. Impulsivity can prevent them from making the most of their opportunities.

What Causes a Scarcity Mindset?

One of the primary causes of a scarcity mindset is a lack of financial literacy. People who are not adequately informed about how money works, how to make wise financial decisions, or how to save properly may be more likely to develop this mentality. This is especially true for those who have grown up in a family or community without a financial safety net, as they may not have learned the skills to manage their money.

Possible causes of a scarcity mindset include:

History of Poverty

People with a history of poverty are more likely to have a scarcity mentality–poverty often carries with it a sense of insecurity. A lack of resources such as money, time, and energy can lead to feelings of deprivation, hopelessness, and fear. When people are unable to access what they need to survive and thrive, it can be difficult to maintain a sense of optimism and hope. You can’t overlook the impact of poverty on mental health.

Scarcity can lead to arguments as family members compete for what they feel is their fair share. This competition can lead to feelings of resentment, insecurity, and mistrust among family members, as each person believes the other is taking more than they deserve. This can result in further strained relationships and family dysfunction.

Additionally, poverty can lead to feelings of inferiority and shame and may affect those who experience intergenerational trauma. Unfortunately, individuals who live in poverty may be viewed as “less than” by society and internalize this belief. They may develop a scarcity mindset if they feel unworthy of success or abundance.¹

Financial Trauma

Financial trauma can come from many different sources, such as job loss, unexpected medical bills, or financial hardships. Those who have experienced financial trauma may become focused on immediate needs, and become consumed with the idea that resources are limited. They may become fixated on saving money, even to the point of avoiding spending on necessary items or activities.

Financial abuse occurs when someone takes advantage of another person financially, often by controlling their access to money or taking away their financial independence. It is a form of domestic abuse that is often overlooked, yet it can have a profound impact on the victim’s ability to trust and manage their finances. The goal of the abuser is to gain control and take away the victim’s autonomy.

Dieting

Dieting can sometimes lead to a scarcity mindset and can have a detrimental impact on both physical and mental health. A person may focus on the foods that are restricted, rather than the foods that are allowed. This can lead to a mindset of scarcity as the person may feel as if they are constantly deprived of the foods they enjoy.

Dieting can also create a cycle of restriction and overindulgence, resulting in shame or guilt after binging on forbidden foods. This further feeds into feelings of deprivation and a scarcity mindset.²

Worries About the Future

Worrying about the future creates a fear of the unknown. Constantly focusing on the future, rather than the present, can make a person feel an incessant need to invest in what’s ahead of them in preparation. This can result in one feeling that their resources for success are limited, and therefore reserve any that they have. As They continue to worry about the future, they may even develop time anxiety or existential anxiety.

Unrealistic View of the World

When somebody has an unrealistic view of the world, they often overlook the abundance of resources and opportunities that are available to them. Instead, they focus on the obstacles that prevent them from achieving desired outcomes. This may feel the need to fight for what they want, possibly resulting in them becoming overly competitive.

Individuals who become hyperfixated on their own needs and are unable to secure what they want can become resentful of those who have more than they do. This type of thinking can delve a person into a mindset fueled by jealousy, envy, and even self-pity.³

Societal Expectations

When it comes to the concept of scarcity, societal expectations can be especially influential in how a person perceives the availability of resources. Socially enforced beliefs, such as those related to one’s appearance, career, and wealth, can make people feel a constant need to strive for more in order to be accepted and successful.

Impacts of a Scarcity Mindset

In today’s world, a scarcity mindset can have far-reaching negative impacts on a person’s mental and physical health. By its very nature, a scarcity mindset is rooted in fear, insecurity, and a lack of trust. Because of this, a person may adopt unhealthy behaviors such as hoarding or overuse of resources. Its effects can leak into relationships and even the workplace.

Possible impacts of a scarcity mindset include:

Poor Financial Decisions

When it comes to managing finances, a scarcity mindset can cause a person to make poor choices. One of the most common examples includes taking on more debt than one can afford to pay off. In a situation of financial scarcity, a person may use credit cards to purchase things they need, rather than their own money. This can lead to a cycle of debt, high-interest rates, and late fees.

Another poor financial decision a person with a scarcity mindset might make is investing in risky or speculative opportunities. When someone believes that money is scarce, they may be tempted to partake in gimmicks to “make money quickly,” which can sometimes go as far as a gambling addiction. Furthermore, research suggests that having a scarcity mindset reduces employment self-efficacy, which in turn leads job seekers to set lower salary goals.⁴

Hoarding

Hoarding is a psychological disorder that can be extremely difficult to overcome and often stems from a scarcity mindset.⁵ As this mentality is rooted in the belief that resources are limited, a person may think that they need to take every advantage to save or collect items, even if these are not necessary. Hoarding Disorder can also be a sign of a larger mental health issue, such as depression or anxiety.

Maladaptive Behaviors

A common maladaptive behavior associated with a scarcity mindset is risk-taking, which can be beneficial if done with caution. However, this can become a problem when someone is faced with a lack of resources. People may take risks that are too large and potentially dangerous to obtain what they need, sometimes resulting in financial loss or physical harm. Those with a scarcity mindset may also engage in dishonest behavior such as lying, cheating, or stealing to fulfill their desires.

However, a more common issue is being too cautious and holding back from taking any risks. A person with a scarcity mindset might not take classes that could help them get a promotion because of the tuition, and instead stay in a lower-paying job. Or, they may not want to cooperate with others to avoid ‘sharing’ valuable information. Unfortunately, this means that they don’t have the chance to benefit from what people could contribute in a teamwork approach.

Mental Health Conditions

When a person constantly feels on guard for potential threats, they can easily become hyper-vigilant and constantly on the lookout for any sign that someone might be taking away what they have or want. This incessant state of stress can be exhausting, thus increasing the risk of one developing an anxiety disorder or depression.

Low Self-Esteem

Someone may experience low self-esteem due to feelings of insecurity, worthlessness, and a sense of not being enough. They may also struggle with negative self-talk as a result of a scarcity mindset. Thus, a fear of failure, perfectionism, jealousy, and a need for external validation can make them more prone to making excuses or avoiding situations.

Impaired Decision Making

A scarcity mindset can be a major hindrance to proper decision-making, as it causes a person to be constantly focused on problems, rather than solutions. One’s goal-directed decision-making skills and cognitive abilities can also be affected in negative ways.¹ Stress over resources can impair confidence, reduce the ability to focus, and reduce the ability to think objectively when making decisions.

Seven Tips for Overcoming a Scarcity Mindset

Having a scarcity mindset can be a major roadblock to achieving your goals. It can make you focus on what you don’t have, instead of what you do have, thus preventing you from taking necessary actions. Fortunately, there are several strategies that can help you overcome a scarcity mindset and take proactive steps to find success.

Below are 7 tips for overcoming a scarcity mindset:

1. Practice Gratitude

When we practice gratitude, we focus on the things we are grateful for and recognize that we have enough. One way to do so is to write down three things each day that you are thankful for. This can be anything from a cup of tea, to a beautiful view, to a meaningful relationship. Be specific and include details about why you are grateful for this aspect of your life. Doing so can help you shift the focus away from scarcity and towards abundance.

2. Consider Therapy

A scarcity mindset can be an incredibly destructive force in life. It can lead to feelings of hopelessness, despair, and a sense of being stuck in an unending cycle of negative thinking. However, you can learn to overcome a scarcity mindset and adopt a mindset of abundance that will open up a world of possibilities.

Making this change on your own can be difficult, so consider seeking a therapist to help you deal with your scarcity mindset. The benefits of therapy are many, and finding the right therapist can be done by using an online therapist directory, seeking a doctor’s recommendations, or asking for a family referral.

3. Seek Support From Loved Ones

When dealing with a scarcity mindset, be honest with your loved ones about your feelings. Let them know what you are struggling with and that you need their help. Your loved ones will likely be more than happy to support you, as they care about your well-being. With the right guidance, you can start to make positive changes and move forward in life with a more positive outlook.

However, you should avoid listening to other people who have a scarcity mindset. They can be a harmful influence and breed distrust of others, negative thinking, and jealousy.

4. Manage Your Finances

The first step to managing your finances is to track your spending. Writing down all of your expenses, both necessary and discretionary, will give you a clear picture of where your money is going. Once you have a better understanding, you can begin to make changes and prioritize your spending and create a budget.

A budget is a plan for allocating your funds that will help guide you in making decisions about your money moving forward. Determine how much money you need for essential expenses, such as food, rent, and utilities, and then set aside some extra for other purchases. Once you have a budget in place, it’s important to stick to it.

5. Stay Physically Active

There are many benefits of exercise for mental health, as it has been proven to reduce stress levels, improve mood, and even increase self-confidence. It can also help you break out of a cycle of negative thinking that comes with a scarcity mindset. Physical activity encourages you to focus on the present moment, rather than on worrying about the future.

One way to practice this is to utilize yoga techniques for anxiety. When you stay present in the here and now, you can let go of your worries and fears, and instead, focus on your current activities.

6. Meditate

Meditating can help you recognize your feelings and embrace them without judgment. This allows you to cultivate a sense of acceptance and self-compassion, which can be difficult when stuck in a scarcity mindset. By meditating, you can begin to understand why you are feeling so anxious. This can help you make better, conscious decisions about how you want to move forward.

7. Reframe Your Thinking & Gain Control

Instead of focusing on what you don’t have, think about what you do have and how you can use it to create something better. To reframe your thinking, acknowledge the thoughts that are causing you to think in a scarcity mindset without judgment or criticism. Ask yourself if these are true and if the evidence supports them. If not, question why you are having these thoughts in the first place. Finally, recognize that you have the power to create change and to take steps towards creating the life you want. A great way to do that is to practice positive affirmations like, “I have enough and I am enough.”

In My Experience

In my therapeutic practice, I’ve seen what can happen when people have a scarcity mindset, but I’ve also witnessed how an abundance mindset can turn things around. By recognizing the signs of a scarcity mindset and understanding the underlying beliefs that contribute to it, you can work to create a more positive outlook. By replacing “not enough” with “plenty,” and focusing on abundance rather than scarcity, you can open yourself up to new possibilities.