Introduction to Financial Mindset
An emotional, fear-based response, a mindset of financial scarcity, often causes people to fall down a rabbit hole of overthinking, believing that they will never have enough money to live comfortably and that they will always be stuck in some form of financial turmoil. This mindset can impact long-term financial well-being and quality of life, experts say.
Why Your Money Mentality May Be Holding You Back
“Mindset plays a very big role in keeping people in the financial situation they are in,” said Jeri Bittorf, financial wellness coordinator at Resolve Counseling Services Canada. Bittorf said she often encounters clients in her industry who have a scarcity mentality. Sometimes people fear that they will never be able to earn more or reduce their expenses and that their situation will never improve.
This emotional reaction usually stems from some sort of trauma surrounding money, said Kalee Boisvert, financial advisor at Raymond James Ltd. It could stem from childhood experiences, such as growing up in poverty, but it can also arise later in life from a perceived lack of resources or from hearing stories of people around you who are unable to pay rent or afford groceries, Boisvert said.
Understanding the Scarcity Mentality
Boisvert recognizes the warning signs of a scarcity mentality in her clients when she hears comments like, "I’m bad with money; I’m afraid I’ll never be able to retire; I should do a better job or do more." That’s "the money shortage mindset working in the background," she said.
Boisvert said this mindset can lead to issues with confidence and self-esteem, which eventually affect everyday decisions about jobs, chosen partners or where to live.
Breaking Free from the Scarcity Mentality
Understanding your financial past is the key to changing your financial future. Bittorf said it’s essential to get to the root cause of this mindset and that journaling plays an important role in uncovering patterns and beliefs around money.
Bittorf uses quick questions about financial security growing up, such as whether their parents talked about money, whether they experienced financial struggles at home, and whether they fit in financially at school. “I want you to think about all of these things because they will influence the decisions you make now, even if you are not aware of them,” she said.
Building Wealth through Mindful Money Habits
While breaking down financial patterns is essential, Bittorf says it comes down to real steps, such as creating a budget, tracking money and breaking down broader financial goals into smaller, actionable steps. That also means making some tough decisions, like cutting expenses if necessary or changing jobs. "You know you’re strong enough to do this. And there’s a lot of support out there," Bittorf said.
Overcoming the Scarcity Mentality
For Boisvert, breaking out of the scarcity mentality was a conscious effort on her personal journey. If she hadn’t freed herself from this mindset as a child, she believes her reaction to money would have been to save and put everything away instead of focusing her spending on what she really cared about.
Practical Advice for a Healthier Financial Mindset
For those stuck in the cycle, she suggested separating fact from fiction and practicing gratitude. "When you feel that anxiety and fear and you look at the numbers and you have the money to pay the bills and the rent, it’s just a matter of reminding yourself, ‘Well, right now I’m safe. Is this an old story that’s coming back to me?’" Boisvert said.
Conclusion
In conclusion, having a scarcity mentality can significantly impact one’s financial well-being and quality of life. By understanding the root cause of this mindset, breaking down financial patterns, and taking real steps towards mindful money habits, individuals can overcome the scarcity mentality and build a healthier financial future. It’s essential to separate fact from fiction, practice gratitude, and focus on what you really care about. With the right mindset and support, anyone can achieve financial stability and live a more comfortable life.