Beware of the Scarcity Mindset
Most people know that they should be spending less on things they don’t need.
Perhaps some of you have even considered or tried frugal living.
However, many of us struggle to commit to frugality or live on a reasonable budget.
One powerful reason for this is the scarcity mindset.
Scarcity mindset is our natural drive to become overly focused on a limited resource that we think we need. This was a highly adaptive way of thinking for our ancient ancestors. If they were running short on food, they were more likely to conserve what they had and focus all of their time and energy into obtaining more food.
It was a strong source of both motivation and group cohesion. Because this is an evolutionary drive, every member of the group would be of the same mindset. The top priority was getting food for survival and non-necessary tasks or conflicts between group members could be forgotten until the more important task was accomplished.
So how does this relate to present-day humans?
Imagine this scenario.
You are going out with friends, furiously rifling through your closet, only to throw your hands up in frustration, thinking to yourself “I have nothing to wear!” This scenario plays out in many areas of our lives.
“I have nothing to eat.”
“I need that new game that just came out because I have nothing to play.”
"I need that expensive gym membership because I will never lose weight without it.”
"My iPhone could stop working at any moment so I need the newest generation.”
"There’s not enough time in the day.”
Scarcity can include feeling like you do not have enough material goods, time, or psychological resources1. Scarcity of material goods is the feeling of not having enough of a certain item while scarcity of time is not having enough time to complete tasks. Psychological scarcity is not having enough self-efficacy, knowledge, and emotional or social resources.
People generally make better long-term choices when a resource is abundant1. When a resource is scarce, people develop tunnel vision where focus is on the scarce resource while other responsibilities and long-term consequences are neglected.
The intensity of focus on a scarce resource requires more mental energy1. This leaves less cognitive resources for other tasks and depletes our willpower. For example, people with limited time may develop a habit of eating fast food, which is faster than cooking a healthy meal but leads to weight gain and poor health.
It is important to realize that scarcity is on a continuum and based on a person’s perspective1. On one end of the continuum are things that you need such as enough food and water to live. On the other end of the spectrum is the thing that you want or that make you happy such as a vacation or a new pair of shoes. This is also relative to one’s experiences. Someone who grew up poor may feel content with the basics whereas someone who grew up rich may feel a sense of scarcity when they can’t buy a new sports car.
Research supports that scarcity can have a negative impact on our health and wallet. Time scarcity has been associated with depression, health and sleep problems1. Additionally, research has demonstrated that people will pay more for a product when there is less of that product on a shelf1. Scarcity of an item motivates people to choose a more expensive product over a cheaper one even when the products are the same.
So what can you do about your scarcity mindset?
Build awareness of your scarcity thoughts.
When a scarcity thought comes up in your mind, acknowledge it and name it for what it is. It is often helpful to write out these thoughts to determine if they are legitimate or not. This could be written in a journal or you can download our Thought Record.
Create and rehearse an abundance affirmation.
Come up with a phrase that speaks to abundance. Practice this phrase on a daily basis and repeat it whenever a scarcity thought pops up. For example “I have what I need.” “Money is abundant.” “My life is full.” “ I have everything in abundance.”
Put off buying something to see if you really need it.
If you feel that you need a new item, put it on a wish list and set a wait time, or if you are shopping online, leave it in your cart and wait a few days before purchasing it. You may decide to wait a week and see whether this is something you need. Chances are you do not really need it. This doesn’t mean that you can’t buy it. Just give yourself space to think about the purchase rather than acting on impulse.
Can this need be met in another way?
If you decide that the product is something you need or really want, brainstorm other low cost ways the need could be met. Are you going out to eat at an expensive restaurant because you are bored or sad? Maybe call a friend instead. Nothing to wear to a wedding? Ask a friend to borrow a dress or rent instead of buy.
Ask yourself “will this bring me joy or improve my life?”
Once you have determined that the item is something you want rather than need, determine what value the product will bring you. For example, buying a pressure cooker may enable you to save time cooking and motivate you to cook more often, saving time, money, and improving your health. Likewise, that shirt on sale that you like but don’t love? Pass.