How does a scarcity mindset lead to debt?
Before answering this question, it is better to discuss what is meant by ‘scarcity mentality’ and how it is related to finance, if a relationship can be explained at all.
When a person has scarcity mindset, he/she believes that he/she doesn’t have enough. These people think that they can’t afford the life they want.
So, it can be said that scarcity mindset and debt are related, since such a mentality can stop you from solving your debt problems.
Implications of a scarcity mindset over debt
1 It may cause anxiety
It also prevents you from focusing on your long-term financial goals, since your mind is occupied to meet your immediate needs.
It is like a decision fatigue - the more time you spend on making small choices, less time you have to tackle your big problems, especially about money matters.
For example, if you’re worrying about how you’ll repay your monthly bills on time, how will you spend your time and energy on making strategies to get out of debt or to plan for your retirement?
You may be earning enough but worrying about not having enough dollars can distract your from making more money.
2 Cannot make good financial decisions
If you are not able to make right financial decisions, which can help you to build wealth, you’re losing money. Usually, this is a result of the fear that you’ll lose what you already have.
3 May end up spending more
A person with scarcity mindset can also end up spending more what in normal circumstances he/she wouldn’t have spent. These people make instant purchases out of fear - the fear of not having enough and the fear of not being successful. Often people compare themselves with others and allow fear to creep in.
What happens? There’s a higher chance to fall into debt.
All these fears can add up debt quickly.
One of the reasons might be you stock food due to the fear of not having enough. It might also be that you swipe your credit cards to buy the latest items out of the fear of being unsuccessful.
On the other hand, the abundance mentality is a sense of mind where people believe that they have enough to spare for everybody. It results in recognition and decision making, which in turn, opens up possibilities, options and creativity.
So, how will you overcome your scarcity mentality?
7 Tips to change your scarcity mindset to avoid debt
1 Avoid comparing yourself to others
Often envy drives your decisions when you have scarcity mindset, thus leading you to swipe your card for huge bills. Just stop once and give it a thought - Are you sure they are not overspending whom you’re envying?
According to Marie Forleo, host of MarieTV and entrepreneur “Be thankful for what you have, you’ll end up having more. If you concentrate on what you don’t have, you will never, ever have enough.”
So, appreciate what you have.
2 Organize your life
This is one of the easiest ways to change to an abundance mindset. Not only it’s easy, but it’s fun, too! Organize your life - your possessions, information, time and the things in your home. When you do it, you’ll realize how many things you already have and how much time you have for yourself.
For example, just by reorganizing your closet, you’ll come to know how many things you have. You may also feel like donating some of them which you won’t require.
Spread some of your wealth among others; you’ll feel happy and content.
3 Appreciate others’ success
It is not so easy but it’s not impossible, too! Try to appreciate others’ success by feeling happy for them. By doing so, you won’t feel inadequate.
4 Watch television less
Television, or rather media, entices you have those things which you don’t have. Advertisements, in particular, cultivate desires. So, it’s better you reduce your media consumption.
Instead, use that time in what you like to do, maybe pursuing a hobby.
5 Take small steps to grow wealth
Try to build your safety net. Open a savings account and invest a small amount in it. Start investing small amounts in the stock market and you’ll be confident when you get profitable returns.
6 Try to find out positive in every loss
The successful people whom you see now have usually made some sacrifices in the past. They have also suffered losses.
So, when you go through a phase of not so happy moments, try to bring out the positive - it will bring a positive change in your life.
So, when dealing with finance, focus on small changes to improve your financial situation.
Another thing is very important
7 Start a fun fund
Every month, deposit a certain amount ONLY for your FUN ACTIVITIES. Spend the dollars on what you like to do - Going for a movie, shopping, partying, dining out, etc.
Believe me - You won’t fall into debt and regret your decisions later; rather, it will help you build a secure financial future and enjoy life.
- You can check out: 7 Steps to reject the “Everyone has debt” mentality