I grew up with a scarcity mindset — feeling like there were limited resources in the world and I needed to work hard just to scrape by.
My dad made a decent middle-class income. But we had a big family, spent everything, and went through some lean times.
I remember a time as a child where it seemed like we only ate rice, pasta, and oatmeal. My mom insists that we were doing fine financially. We may have just gone through a phase where my 3 brothers and I wanted to eat that way. But that memory stuck with me. And was one reason I think the scarcity mindset sunk in for me.
I was also raised in a wealthy suburb of Scottsdale. Many of my friends and classmates had money. And they showed it with designer clothing and luxury cars. The difference between how they lived and how my family lived contributed to my feeling that we didn’t have enough.
Their lives promoted an abundance mindset. While mine promoted scarcity.
When I reached college, I would walk past homeless men on my way to class. And even though I was on a scholarship to study engineering, I feared that I could end up homeless someday.
In hindsight, my fear wasn’t logical. But it was real for me. And I had to deal with it until success in school gave me confidence that I could get and keep a good job.
The good and bad of a scarcity mindset
There are benefits to starting life with a scarcity mindset. I believe it caused me to work harder and accomplish more in school, early in my career, and real estate investing. And it certainly caused me to save more and spend less when money started rolling in.
There are many stories of rags to riches. Many of them far more extreme than my own. In fact, 80% of millionaires come from middle-class families or lower according to a study by Ramsey Solutions. 79% didn’t get an inheritance. And only 3% received an inheritance of $1 million or more.
So why is this article titled Life Is Better when You Have an Abundance Mindset?
A scarcity mindset can lead to negative behaviors too. Like never being able to spend money, even after building a fortune. And not being generous toward others.
Thinking that there isn’t enough for them, some people with scarcity mindsets live such a penny-pinching, selfish life that they never enjoy what they’ve worked for.
I know people who make more money than I ever did and still worry about whether they paid $1 more than me when they split a restaurant bill. Others who wouldn’t even consider donating money to charity because they’re afraid they won’t have enough. And some who have missed once-in-a-lifetime experiences because they don’t want to spend money that they clearly have.
It isn’t that an abundance mindset is better than scarcity in every situation and at all times in life. But that there is a time when scarcity may serve you well and many more times when it won’t.
There is a time for scarcity and a time for abundance in life.
The good and bad of an abundance mindset
An abundance mindset gives you the belief that there is enough money in the world for everyone. That there don’t have to be losers just because you win. And that you — or your investments — will simply be able to make more money to replace what was spent.
When you have an abundance mindset, you give yourself more permission to experience and enjoy life. You’re more likely to accept an invitation to dinner with a friend or take your family on vacation to an exotic destination. And you’re more likely to be generous toward friends, family, and charities throughout life.
As a bonus, you’re less likely to be stressed about money. After all, you’ll just make more!
This can be taken too far, of course, when you truly don’t have the money to spend or give away. Or if your earning potential is low. Good financial planning requires saving and investing enough for the future, balanced with spending wisely in the present.
So what’s the best balance of scarcity and abundance?
First, don’t let your mindset get too extreme in either direction. Try to stay closer to the middle unless you are either bankrupt or rich beyond your wildest dreams.
If you tend toward a scarcity mindset, use it to your advantage to save aggressively for the future. But don’t let it keep you from having a good life. Or from being generous towards people in your life who are in greater need than you.
A mild scarcity mindset can be a good thing when you’re young and/or don’t have much money.
Once you have money, though, a mild abundance mindset is better!
Don’t go so far with abundance that you spend money you don’t have. But allow yourself to be generous, to spend on experiences that you love, and to live without unnecessary financial stress.
How I changed my mindset from scarcity to abundance
I had a scarcity mindset through college and early in my career. But it slowly changed into an abundance mindset as I had success in my career and built wealth.
And I was lucky to have a wife with an abundance mindset to balance my scarcity mindset. She helped me to realize that I shouldn’t hold on to all my money, even when my career had just begun. And because of her, I took some amazing trips to places like New Zealand, Brazil, and Antarctica that are some of my best memories!
We also gave money to charities. And I saw that even as I gave away money that could have made me significantly wealthier, we earned more, got bonuses, and didn’t need all the money that we were making. There really is abundance in the world.
As I built a small portfolio of rental properties, I realized that I was afraid of taking on too much debt. My scarcity mindset — and seeing some of my friends and neighbors lose their homes — made me worry that my $500k in mortgage debt was too much. So I decided that I needed to be more conservative in that part of my life.
By the time my daughter was born, I sold one rental and paid off the others. And when she was 18 months old, I took her picture as she dropped our final payment in the mail for the home we lived in. We were completely debt free!
Debt freedom is something that I believe is more important to people with a scarcity mindset than those with an abundance mindset. It allowed me to relax and see that we were going to do well with money. And even as I switched my mindset toward abundance, I see that I would be willing to take on a little more debt again if needed to finance an investment that I believed in.
So for me, the act of generosity and experience of abundance itself allowed me to turn the dial from scarcity to an abundance mindset. It took years, not days.
How an abundance mindset changed my life
Living with an abundance mindset has made my life completely different today than it would have been if I continued with a scarcity mindset.
It allowed me to make a huge leap from my comfortable engineering career and life in the suburbs of Arizona to writing and coaching in the mountains of Colorado. If I had kept my scarcity mindset, I wouldn’t have believed enough in my investments or myself to make that change.
And now, I’m spending much more time doing things I love with people I love. I have much more time with my wife and daughter. And I won’t miss out on my daughter’s childhood!
I’m also living with less stress and more peace than I had in my former life.
Read this article for more on what life is like after leaving my job and living a life of abundance.
Summary
Life is better when you have an abundance mindset. All of my greatest memories have come when I allowed an abundance mindset to win over my tendency toward scarcity.
Match it with wise spending and financial planning that includes the future as well as the present. And you can live the life of your dreams!
If you enjoyed this article, you’ll also like How to Make Your Dream Life a Reality.
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