9 Signs You Have a Scarcity Money Mindset

A scarcity mindset is the belief that there’s never enough of anything to go around. From money to career opportunities to love, those with scarcity mindsets believe that the world is a place of sharply limited resources.

This belief often leads to feelings of stress and insecurity, and it can be tough to shake off, even when logic tells us that our anxieties are excessive.

When we’re caught in the grip of a scarcity mindset, we make decisions out of fear. We become so focused on preserving what little we have that we’re unable to see opportunities for growth. We become risk-averse and miss out on chances to improve our lives.

What causes scarcity money mindsets?

A scarcity money mindset is often the result of traumatic experiences or difficult life circumstances. But it can also be a learned behavior passed down from parents or guardians.

If you grew up in a household that was always struggling to make ends meet, you might have internalized the belief that money is hard to come by and impossible to save. And if your parents were constantly arguing about money, you may have come to believe that financial stability is unattainable.

Fortunately, a scarcity mindset doesn’t have to be permanent. With proper understanding and effort, you can change your attitude towards money and break the cycle of financial insecurity.

Not sure if you have a scarcity mindset? Here are 9 signs to look out for:

1. You’re constantly stressing about debt (without actually paying it off)

Those with scarcity mindsets often believe that they will never be able to get out of debt, no matter how hard they try. They may make minimum payments on their credit cards or student loans, believing that’s all they can afford.

Living in debt isn’t actually a financial death sentence. With proper spending habits and financial planning, a debt-free life is possible for everyone. But first, you have to adopt a healthier mindset.

2. You’re scared of actually using your emergency fund

People with scarcity money mindsets usually see their emergency funds as last resorts, to be used only when absolutely necessary. In a way, they’re right—except that they’re so worried about running out of money that they refuse to use their emergency fund even when facing a real financial emergency.

Yes, it’s important to be mindful of your spending, but hoarding your emergency fund can end up doing more harm than good, especially if you end up racking up debt instead of dipping into it.

If you’ve worked to save up some cash for emergencies, remember that it’s there to be used. If an unexpected, necessary expense comes up, you shouldn’t feel guilt or shame about doing so.

3. You don’t set ambitious financial goals

It’s normal to be a little cautious when setting your financial goals. After all, you don’t want to set yourself up for disappointment.

That said, although a healthy dose of realism is good for financial planning, be careful not to let your fear of failure hold you back. It’s good to set small, achievable goals, but you should also set some big ones, too.

Exclusively setting small goals perpetuates the cycle of financial insecurity. If your goal is to simply get by, that’s all you’ll end up doing.

Set ambitious goals that challenge you and force you to grow. You might not achieve them all, but you may be surprised by the progress you make.

4. You let the fear of emergency expenses stop you from investing

According to Franklin Templeton, one of the most significant barriers to successfully investing is the fear of losing money.

It makes sense—no one wants to see their hard-earned money disappear.

Wealthy people understand that to make money, they have to be willing to invest it, which means taking on a certain amount of risk.

Of course, you shouldn’t invest so much of your money that you’d be in trouble if it dropped in value, but holding onto every penny you earn is a waste that won’t allow your money to grow.

5. You’re unwilling to spend money to enjoy yourself

Those with a scarcity mindset are often unwilling to spend money on themselves, whether that means buying a new piece of clothing, getting tickets to a concert, or simply going out to eat. They convince themselves that they can’t afford to enjoy life’s simple pleasures and focus on hoarding every dollar that comes in.

Avoid this mentality. You deserve to treat yourself (within reason, of course)! If you’re working hard and making progress towards your goals, you deserve to enjoy the fruits of your labor.

6. You typically avoid thinking about your money

When was the last time you sat down and took a good, hard look at your finances? If you’re like most people, it’s probably been a while.

For many of us, money is a taboo subject—the last thing we want to do is talk about how much we make, how much debt we have, if we’re saving enough, etc. We don’t even like to think about it because it makes us feel uncomfortable. We’d rather just ignore our finances and hope that everything will work out in the end.

While it’s perfectly normal to feel uneasy when thinking about money, avoiding the subject altogether will do little to improve your money mindset. In fact, it could make things worse.

The more time you spend avoiding your financial truth, the more likely you are to fall into a cycle of debt and insecurity.

Take some time to educate yourself about personal finance. Read books, listen to podcasts, and talk to people who are financially secure. The more you know about money, the less scary it will be.

7. You’re reluctant to ask for a raise

Despite the thrill, satisfaction, and feeling of accomplishment that comes with earning a raise, many people are afraid to ask for one.

According to a 2020 report, 60% of female workers said they’d never negotiated their salary with an employer. 72% said that rather than asking for a raise, they would prefer to quit their current job to get a higher-paying one elsewhere.

This makes sense—marching into your boss’s office and saying you deserve a raise can be intimidating. However, if you’re not comfortable asking for a raise, you’re leaving money on the table, and if you’re not willing to negotiate your salary, you’re at a disadvantage both professionally and financially.

Don’t be afraid to ask for what you deserve. It’s not greedy to want to be paid what you’re worth.

Start by doing your research to determine the average salary for your position and experience level. Then, armed with this knowledge, make a case for why you deserve a raise. Be confident and prepared to negotiate.

8. You’re constantly comparing yourself to others

Whether it’s your neighbor’s new car, your friend’s luxurious vacation, or your colleague’s designer handbag, you can’t help but feel that you’re falling behind.

This thought pattern is dangerous because it leads to feelings of envy, insecurity, and inadequacy. It’s also a major contributor to imposter syndrome—the belief that you’re not good enough or don’t deserve your success.

The next time you find yourself comparing your life to someone else’s, remind yourself of two things:

• You don’t know what goes on behind closed doors
• Everyone’s path is different

Instead of comparing yourself to your friends, coworkers, or family members, try comparing where you are now to where you were last year. If you still find yourself feeling discouraged, focus on where you want to be next year, and then make a plan to get there.

9. You have a negative relationship with money

Do you find yourself saying things like, “I hate money,” “money is the root of all evil,” or “I’ll never be able to afford that”?  If so, you likely have a negative relationship with money.

When you dwell on these negative thoughts, they can become beliefs, and these beliefs shape your reality.

For example, if you believe that money is the root of all evil, you’re more likely to make decisions that reflect that belief. You might avoid talking about money and make impulse purchases instead of investing in your future.

It’s time to change the way you think about money. Reframe your mindset so that you’re conceiving of it as a tool to help you achieve your goals and live a better life.

This change in your mindset will be reflected in your behavior. You’ll be amazed at the way opportunities—and more money—start to flow into your life.

Getting over a scarcity mindset requires a great deal of self-awareness, introspection, and effort, but it’s not impossible. With the right attitude, you can overcome your scarcity mentality and start living a better life.

Here are a few tips to help you get started:

1. Praise yourself for what you’ve already saved

Life is full of ups and downs, and during the tough times, it’s easy to dwell on your mistakes and beat yourself up for things you could have done differently. But it’s important to remember that even if you sometimes make mistakes, you’re also making progress and learning things.

The next time you’re feeling down about your finances, take a step back and remember where you started and the work it took to get you to this point. Every victory counts, whether it’s paying off a small debt or saving up a rainy day fund. Remember to take pride in the small wins.

2. Think of “failure” as “feedback”

Instead of beating yourself up over your mistakes, use them as opportunities to learn and grow.

Every time you make a financial mistake, take a step back and ask yourself what you could have done differently. What were the circumstances that led to it? What can you change to avoid making the same mistake in the future?

Answering these questions will help you avoid repeating your mistakes and take you one step closer to overcoming your negative money mindset.

When you consider your mistakes, be sure not to dwell on them. The goal is to learn and grow, not to obsess and ruminate.

3. Invest in yourself

Be your own best advocate. Invest in your education, career, and personal development. The more you invest in yourself, the more confident you’ll become—and the more likely you are to attain financial security.