We’re all susceptible to biases and unhealthy relationships with money. Even financial advisors hire their own financial advisors. It isn’t because we aren’t confident in our ability to manage our own finances, it’s that we are aware that it is difficult for anyone to exclude the emotions tied to the money we’ve worked so hard to earn and save. Those emotions are what can cause us to make rash decisions, preventing us from methodically protecting the nest egg we’ve built up.
This is how your mindset can play a significant role in your financial success. When you’re clear-headed, motivated, and honest with where you’re at, you give yourself a solid foundation to achieve your financial goals.
But it can be hard to not live in a scarcity mindset, especially given the pressures of social media and consumer culture that reinforce the idea you’ll never have “enough” to find happiness and fulfillment. This can lead people to constantly crave more, view their financial lives through an unrealistic lens, and feel less appreciative or even aware of the many things they already have.
While a scarcity mindset can be detrimental to your long-term happiness, you also have the power to change your approach. Let’s explore how you can move from scarcity to abundance, and how this transformation can help you feel more successful and fulfilled in your financial life.
The Problem With a Scarcity Mindset
Most people think that having a scarcity mindset is what brings you to successfully saving an appropriate amount to feel comfortable. In practice though, this can instill you with fear that no matter what you do it will “never be enough.” You save aggressively, but at what cost? Are you living the life you want to? Are you balancing both your short-term as well as your long-term goals?
Think of time as a rare currency. Are you spending that valuable currency on the things you love most? Ask yourself: “If the doctor came to me today and told me that I have 24 hours left to live, how would I feel? Would I feel overwhelmed by regret, or thankful for the way I was able to spend my time?”
As an example, think back to the early days of the COVID-19 pandemic. When many people feared that supply chains would dry up and they might lose access to essentials such as toilet paper, hand sanitizer, and dry goods, their shopping habits shifted. Many spent erratically and bought more than they needed. Yet, no matter how much they bought, they worried it wasn’t enough.
This is an example of what a scarcity mindset can look like (albeit on a massive scale). It can feel stressful, unproductive, and can lead to impulsive or irrational decision-making. When you hold a pessimistic, scarce view of your financial well-being, your guard tends to go up, and your anxiety is likely to increase.
In terms of financial decision-making, a scarcity mindset could lead you down two paths — either you’re inclined to “hoard” cash (rather than invest it or spend it), or you’re tempted to spend, spend, spend (and forego any type of long-term goals or planning).
What Is an Abundance Mindset?
An abundance mindset is the opposite of a scarcity mindset and can help unlock your greater financial potential to achieve long-term goals. At Abacus, we call this an “enough” mindset. It’s knowing you have enough and you’re doing enough to feel personally fulfilled and satisfied with your life.
An abundance mindset means having a positive and realistic attitude toward your financial life. Because financial freedom isn’t just a savings goal or particular net worth; it’s also the reassurance of knowing you’ll be okay and you can live life on your terms — without having to worry about where your next paycheck will come from.
It’s worth noting that an optimistic “enough” mindset doesn’t magically manifest positive returns overnight. Instead, an attitude of abundance fuels your motivation to take action and make thoughtful decisions that can help you achieve your goals.
Identifying Your Own Money Beliefs
Self-awareness is a critical component of transforming your mindset. One of the best ways to make yourself aware of your biases or behaviors is to consider your personal money beliefs and history.
Think about how your parents or guardians were with money when you were growing up. Did they talk about money with you or was it a taboo topic? Were they conservative spenders or reasonably generous with how they spent their money? Did they tend to live paycheck to paycheck? What philosophies or sayings about money did they repeat throughout your childhood?
Maybe they preferred to live modestly and put most of their money into savings or investments. Or maybe they liked to spend and saving money became an afterthought. Whatever their approach, think about as you moved into adulthood, did you maintain those same beliefs your parents had? Or did your own coming-of-age experiences change your outlook?
Another quick exercise to uncover your own money beliefs: simply look over your previous months’ credit cards or bank statements. While we can rationalize purchases or tell ourselves we didn’t spend that much, statements don’t lie — and facing them head-on may help you overcome any anxiety you might be feeling over your money habits.
How to Challenge Scarcity Thoughts
If you believe you’re vulnerable to thoughts of scarcity and pessimism about your wealth, try to reframe your thinking.
It can be helpful to review your current account statements and financial standings to get a clear sense of where you’re at in the moment. Look at the numbers and remind yourself of what you do have and what you’re capable of. Acknowledge that you’ve worked hard, you continue to do what you can, and through mindfulness and dedication, you will find a path to reach the greater financial goals you have for your future.
When you replace limiting beliefs with positive and pragmatic affirmations, you can help empower yourself to think differently about the pursuit of your dreams in ways that can disrupt the pattern of scarcity rumination.
Cultivating Gratitude
An “attitude of gratitude” is often necessary for obtaining an abundance mindset. Gratitude can offer a healing state of mind for your mental, emotional, and financial well-being. Like exercise, it’s something that requires dedication towards to feel the effects regularly.
Consider incorporating a few daily gratitude practices into your life, such as:
- Saying out loud what you’re grateful for
- Writing down what you’re grateful for in a gratitude journal
- Meditating
- Looking for moments of gratitude throughout the day, even in challenging situations
- Reading books and articles or listening to inspirational podcasts about mindfulness
Seek Out Positive Influences
As you work toward transitioning your mindset and embracing gratitude, consider the current influences in your life. It’s much easier to achieve a positive attitude and abundance mindset when you have like-minded, positive people, and empowering influences around you. From the friends you see on the weekends to the podcasts you listen to, books you read, or celebrities you follow online — it’s surprising how influential other people can be on your own mindset.
Embracing Abundance in Daily Life
Achieving an abundance mindset doesn’t solely apply to your financial philosophy or big life decisions, it’s a mindset you can use to make everyday decisions. Embrace ways to find joy in simple pleasures without overspending. It could be enjoying your favorite drink at the coffee shop down the street; it could also be simply taking a walk after work every day to clear your head and get your blood pumping.
However you embrace a sense of abundance, practice incorporating mindfulness into your financial decisions. Avoid making impulsive purchases, especially ones that won’t support your long-term happiness.
Setting and Achieving Financial Goals
How do you know if you’re making mindful financial decisions? By setting clear financial goals and creating a roadmap to achieving them.
Your unique values and goals should drive your day-to-day money habits and help you stay motivated in your journey to abundance and gratitude. Goals can help create a “finish line” of sorts, which can be incredibly rewarding to experience.
It can be helpful to picture your goal and think about what difference it will make for you to achieve it, how experiencing new connections and creating new legacies will feel. It’s much more effective to envision how setting and completing your goal will impact your life rather than focusing on the money itself.
Giving and Sharing Abundance
If you want to take things further, consider incorporating charitable giving into your financial plan.
One of the most impactful ways to improve your own feelings of gratitude is to get involved with helping others. A recent study found that highly generous people were 23% more likely to be satisfied overall with their lives (including their belongings, jobs, and relationships).
When you give lovingly and generously to others who may be in need, your own satisfaction and gratitude grow.
Monitoring Your Progress
Transforming your mindset won’t happen overnight, and it’s something you may have to continually reinforce throughout your lifetime. It can help to track your journey in a journal or talk to a financial professional about your progress.
Allow yourself to celebrate small wins, and consider creating realistic and achievable milestones. This can help you stay committed to your own development as you work toward financial freedom and success.
Seeking Support and Resources
Along your journey, you’ll likely find it helpful to seek support from mentors or coaches. There is no shortage of books, podcasts, and courses you can take that can help shift your mindset and generate more gratitude in your life.
Abacus has created the mindfulness series Money Meditations, which includes short, guided meditations focused on specific aspects of your money life.
You can also look for virtual or in-person communities of like-minded individuals embarking on similar journeys.
Ready to Transform Your Money Mindset?
The path from scarcity to abundance is best traveled with a companion or guide. At Abacus, we understand the critical role your mindset plays in achieving financial success and freedom. To learn more about how we can help, contact our team today.
