Millennial Money: A scarcity money mindset can cost you

Aug 15, 2022, 4:00 PM | Updated: Aug 16, 2022, 6:29 am
U.S. $100 bills are seen, Thursday, July 14, 2022, in Marple Township, Pa.  When scary economic new...

U.S. $100 bills are seen, Thursday, July 14, 2022, in Marple Township, Pa. When scary economic news is everywhere, your impulse might be to hunker down with your money until things improve. But adopting a scarcity mindset, where you believe there’s a limited amount of resources — whether or not that’s actually true for you — can get in the way of making sound money decisions. (AP Photo/Matt Slocum)

(AP Photo/Matt Slocum)

We all saw it at grocery stores in 2020. The shelves, once brimming with toilet paper and hand soap, were bare. We hid in our homes, deep-cleaning every surface, occasionally braving the threat of COVID-19 to hunt down the last remaining bottle of hand sanitizer in a 50-mile radius. We felt out of control, so we controlled what we could: the contents of our kitchens and bathroom cabinets.

Today, this fear of scarcity plays out differently, due to rising prices, a volatile stock market and whispers of a looming recession. We’ve simply rolled one set of worries into another, continuing to assume all our resources are scarce, whether that’s true for us or not.

If the current situation has you avoiding any long-term planning or fearing spending any money, even on things you need, you’re experiencing a scarcity mindset. This basically means you view your resources — like money, food and employment opportunities — as limited. And when you’re concerned about access to these things, it’s natural to want to grab onto whatever you can.

At times, this impulse is useful. “It helped humans survive back in the day when we faced existential threats from nature,” says Courtney Cardin, co-founder of Aura Finance, a financial wellness and investment platform that’s currently in the private testing phase. “Everyone who’s here had an ancestor who benefited from a scarcity mindset.”

But when a scarcity mindset isn’t rooted in a real need to avoid hungry lions or preserve a season’s worth of food without refrigeration, it can work against you, persuading you to make financial choices that aren’t actually in your best interest.

THE EMOTIONAL AND FINANCIAL EFFECTS OF A SCARCITY MINDSET

Factors beyond your control, like inflation or supply chain shortages, can limit your access to the things you need and make it harder to achieve your financial goals.

“You can imagine it’s not a very pleasant place to be, to be kind of on guard, thinking that you’ve got to keep everything that you have, that you’re going to lose it in some way,” says Susan Greenhalgh, an accredited financial counselor and founder of Mind Your Money LLC in Providence, Rhode Island. “That’s kind of a vigilant standpoint, and that’s a very difficult standpoint to enjoy life from.”

The ongoing stress can cause you to hold onto cash in a savings account because you’re afraid to invest, potentially limiting your ability to grow your net worth over time. Or you could take the opposite approach, spending money like there’s no tomorrow because you worry items you need will disappear from stores. When you’re anxious about the short term, it’s hard to plan a few years — or even months — ahead.

You may even make ineffective or risky moves to try to lock in some wins. “Every product you see out there is a potential solution for you,” says George Blount, founder of nBalance Financial, a financial therapy and wellness practice in Boston. “The lottery’s going to look a lot better. Cryptocurrency is going to look a lot better.” But cryptocurrency may or may not be a good fit for your overall financial picture, and only one lucky person won that billion-dollar payout. Unless you’re reading this from a lounge chair on your new superyacht, it probably wasn’t you.

HOW TO PUT YOUR FEAR TO WORK

Though anxiety feels awful, it can be a productive emotion that spurs you into action. Reading through some recent bank and credit card statements, for example, can give you a better sense of where your money goes each month and where you might be able to cut back on spending.

Setting up automatic money transfers into an emergency savings account can help you feel more confident that you’ll be able to handle an unexpected expense. Or perhaps you update your resume because you’re worried about layoffs at your company. Whether or not that ends up happening, you’ll be prepared to job hunt at a moment’s notice.

What’s not productive is obsessively tracking stock prices, falling for get-rich-quick schemes or constantly monitoring the news. There’s a lot of yelling, often by people who don’t totally understand what’s going on but have opinions about it anyway. Give yourself the time and space to determine what you truly need and value, so you can set appropriate money goals and make a plan if things don’t go the way you hope they will.

“We’ve got to stop and get quiet and figure those things out,” Greenhalgh says. “Once we do that, when we have our mind to our money connection, we can dampen the noise out there a little bit.”

__________________________________

This column was provided to The Associated Press by the personal finance website NerdWallet. Sara Rathner is a writer at NerdWallet. Email: [email protected] Twitter: @SaraKRathner.

RELATED LINK:

NerdWallet: Mega Millions: 5 ways to spend a billion dollars https://bit.ly/nerdwallet-how-to-spend-a-billion-dollars

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - Elon Musk speaks at the SATELLITE Conference and Exhibition March 9, 2020, in Washington. Tr...
Associated Press

To buy Twitter, Musk has to keep banks, investors on board

If the squabbling ever stops over Elon Musk’s renewed bid to buy Twitter, experts say he still faces a huge obstacle to closing the $44 billion deal: Keeping his financing in place. Earlier this week, Musk reversed course and said he’d go through with acquiring the social media company under the same terms he agreed […]
1 day ago
FILE - In this file photo released by the U.S. Navy, a Saildrone Explorer unmanned sea drone sails ...
Associated Press

US, UK hold drone drill in Persian Gulf after Iran seizures

DUBAI, United Arab Emirates (AP) — The U.S. Navy held a joint drone drill with the United Kingdom on Friday in the Persian Gulf, testing the same unmanned surveillance ships that Iran twice has seized in recent months in the Middle East. The exercise comes as the U.S. Navy separately told commercial shippers in the […]
1 day ago
A man wearing a blanket cast his vote at a poling station in Maseru, South Africa, Friday, Oct. 7, ...
Associated Press

Thousands vote in southern Africa’s small kingdom Lesotho

MASERU, Lesotho (AP) — Thousands of voters in Lesotho are casting their ballots in the country’s general elections. The elections are a tight race between the top three parties out of a field of more than 60 registered political parties. Outgoing Deputy Prime Minister Mathibeli Mokhothu of the Democratic Congress party is running against his […]
1 day ago
A Russian rocket sticks out of the ground in a forest near Oleksandrivka village, Ukraine, Thursday...
Associated Press

Missiles, drones hit Zaporizhzhia again as death toll rises

KYIV, Ukraine (AP) — The death toll from a Russian missile attack on apartment blocks in the southern Ukrainian city of Zaporizhzhia rose to 11 on Friday as the city was hit again by missiles and — for the first time — by explosive packed drones. With its army suffering a series of stinging battlefield […]
1 day ago
Associated Press

Japan regulator orders brokerage to halt block trading

TOKYO (AP) — Japan’s Financial Services Agency ordered brokerage SMBC Nikko Securities to suspend its block trading operations for three months from Friday as part of penalties in a market manipulation case. That follows the arrest of its vice president, Toshihiro Sato, and several other employees on suspicion they put in massive buy orders to […]
1 day ago
Associated Press

Danes puzzled by minor tremors in international waters

COPENHAGEN, Denmark (AP) — Officials in Denmark are puzzled by four small tremors that were recorded this week off a northeastern Danish island in the Kattegat sea. The Geological Survey of Denmark and Greenland (GEUS) said it had detected the tremors on Tuesday and Wednesday, adding that each time there were two tremors approximately 30 […]
1 day ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
...

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!
...

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
Millennial Money: A scarcity money mindset can cost you