Mindset Shifts for Financial Freedom: From Money Scarcity to Abundance
Have you ever felt anxious about treating yourself to something nice, even if you can afford it?
Do you feel a sinking feeling in your stomach when you spend money, because you think you should be saving it instead?
These are signs of a scarcity mindset—a belief that resources, especially money, are limited and easily depleted. This mindset can affect every decision, from grocery shopping to bigger financial choices like investing or budgeting.
In this post, we’ll dive into what a scarcity mindset looks like, where it comes from, and the ways it can hold you back. By understanding its roots, you can start shifting toward an abundance mindset—using money not from fear but as a tool to build a more fulfilling life. I’ll share practical tips and insights from my own journey in moving past scarcity thinking and learning to spend with intention. Let’s get started!
What does a scarcity mindset look like?
A scarcity mindset is the belief that resources—whether money, time, or opportunities—are limited and therefore exhaustible. Imagine seeing your money as a small lake. Every time you take a bucket of water from it, you worry there’s a little less, eventually leaving you with nothing. This constant sense of limitation can shape how you approach spending, investing, and even living your life.
Here are some common behaviors that represent a scarcity mindset:
1. Reluctant to invest in quality
Someone with a scarcity mindset might hesitate to buy a high-quality winter coat because the price tag feels “too high”, even if they can afford it. Instead, they settle for something cheaper, even if it may not last as long or offer the same warmth.
2. Fear of taking financial risks
They may avoid investing in the stock market because it seems “too risky”, preferring to keep all their money in savings accounts where it feels “safe”. In this case, the need to feel secure outweighs the potential for financial growth.
3. Opting for the cheapest choices
People with a scarcity mindset may pick the lowest-priced items at the grocery store, not because of preference, but because spending more seems “wasteful” even if it could mean compromising on quality.
4. Won’t pay for self-investments
Those with a scarcity mindset may refuse to pay for new clothes, a gym membership, or nice perfume because they see those things as “frivolous”, even if the return on their personal happiness or health is great.
People with scarcity mindsets make decisions from fear or lack rather than what could bring joy, stability and growth.
This mindset can spill over into other areas of life, affecting mental health and lifestyle choices. For example, they may call a $50 concert ticket with friends “too expensive” and miss out on meaningful social connections. They may think that buying themselves a nice perfume is “frivolous”, therefore proving to themselves that they don’t deserve nice things.
When people consistently believe they don’t have enough, they tend to shrink their dreams and stay in their comfort zones, avoiding opportunities that could enrich their lives.
Where do scarcity mindsets come from?
Scarcity mindsets usually arise from a combination of personal experiences and cultural messages that reinforce a sense of limitation.
For example, if you grew up in a family where money was tight, you may have watched your parents work multiple jobs just to get by, worry constantly about finances or sacrifice their own needs to provide for the family. Those early childhood messages can cement the message that feeling financially secure is hard to achieve.
In addition, most of us grew up in a society that glorifies over-saving and frugality. Coupon clipping and budget slimming is seen with a sense of pride and “hustle culture” - the belief that we need to work harder to keep up with others - reinforces the idea that we are always behind our peers.
Finally, facing economic hardship such as job loss, economic instability or even a global pandemic can deepen a sense of scarcity. In challenging times, returning to scarcity patterns - like cutting back on spending or not investing - can feel like a way to regain control in an unpredictable world. However, even if these actions provide a sense of temporary comfort, they once again reinforce the belief that there will never be “enough”.
How do I shift from a scarcity mindset to abundant one?
Moving from a scarcity mindset to one of abundance takes time and intentionality. Change won’t happen overnight, but with a consistent effort you’ll start to see a shift in how you think about money and resources.
Here are a couple techniques to get you started:
1. Identify your triggers
An important first step is to recognize what activates your scarcity mindset. For example, you may feel comfortable buying gifts for other people, but spending on yourself feels “frivolous” or “selfish”. This stems from the belief that self-care is unnecessary, therefore activating a scarcity response if treating yourself.
Similarly, your trigger could be seeing someone else spend on something you consider “unnecessary”, because it feels too indulgent. For example, if your spouse comes home from the store with name-brand Skippy peanut butter instead of the generic store-brand.
Knowing your triggers helps you to pause and challenge these automatic thoughts as they arise.
Personally, my scarcity mindset was activated by spending money on myself. I thought it was selfish and irresponsible to buy myself nice things, even if I would buy them as gifts for others. For you, it might be seeing a partner spend on things you consider frivolous. It may be buying anything on-brand, like Charmin toilet paper.
For the next week, notice your behaviors around spending. Take particular note of any anxiety that arises when you or your partner spends money.
2. You need a budget!
Building a realistic budget is one of the most powerful tools you have for conquering your scarcity mindset. Having a crystal clear view of how much money you need for monthly expenses and savings goals can help you feel secure and in control of your finances, therefore reducing anxious thoughts about spending. A budget is an important part of a healthier, more abundant mindset with money.
3. Repeat a mantra
Whenever you feel that familiar tightness in your chest or worry when spending money, try repeating this mantra:
I use money as a tool to build the life I desire and deserve.
This phrase will help remind you that your spending should align with the life you are intentionally creating, not just fears of scarcity. Most people don’t think of money as a tool for building their ideal lives. Instead, they spend impulsively without considering larger life goals. By using this mantra, you can help shift your focus towards more conscious, goal-oriented spending.
My Story
I used to have a scarcity mindset with money. I was raised in a middle class family, where I always had food and a home, but frequently heard “we don’t have money for that”.
As an adult, this led to me internalizing that I wasn’t the “type of person” who spent money on themselves. I would hang onto lots of things “just in case” - like wearing a worn-out jacket for 10 years or keeping a pair of shoes I never wore because they “might be useful” someday. I never got my nails done because I could paint them myself, and my mom cut my hair through my whole teenage years.
Growing up in a middle class household, I had all of my birthday parties at home and my mom made amazing home-made decorations.
I used to consider any spending on myself to be “frivolous”, even if it brought me joy, because I constantly worried I wasn’t saving “enough”.
It took me several years and a good reverse budget to finally begin letting go of my scarcity mindset.
Today, while I haven’t entirely let go of those childhood habits, they no longer control my decisions. I no longer worry about buying on-brand foods at the supermarket - if I prefer them - and I treat myself to new things like shoes and jewelry, when I know they will bring me happiness.
Most importantly, I now spend with intention. Since I know my monthly expenses and savings are covered, I consciously use the remaining money to spend on things that add joy and fulfillment to my life. I’ve loosened my grip on my money and learned to spend in ways that genuinely bring me happiness.
Final Thoughts
Shifting from a scarcity mindset to one of abundance is a journey, but the rewards are worth it. By recognizing the roots of your scarcity beliefs and practicing intentional spending, you can build a healthier relationship with money—one that brings joy and supports your goals.
Remember, abundance isn’t about reckless spending; it’s about using your resources thoughtfully to create a life you truly enjoy. Start small, stay consistent, and watch as your mindset transforms. You have the power to let go of fear and embrace a fulfilling, abundant approach to money.
Action Steps
Identify your scarcity thoughts. Next time you feel anxious while making a purchase - ask yourself why. What is it that you’re afraid of?
Identify your triggers. Is there a specific type of spending that feels “right” or “wrong” to you? Maybe you spend guilt-free on your kids, but struggle to buy anything nice for yourself.
Create a budget. A budget is a powerful tool that helps you see exactly where your money is going. This will help guide your money decisions moving forward.
Remember: Money is a tool used to build a life you desire and deserve. YOU get to decide what to do with your money. YOU are in charge of your life. Use your money in ways that maximize your happiness.
Your life may not be perfect, but it is imperfectly yours. The only way to live it is your way.
Katherine, founder of Imperfect Budget
Imperfect Budget is an educational platform built to help women align financial goals and free themselves from limiting money mindsets.
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