Your Money Mindset


People are often described as pessimists or optimists – the proverbial bottle half empty or half full. How you see things - whether a life event, opportunity, obstacle or external messages - can have a big impact on how you react to and deal with them. Where one person sees a problem, another sees an opportunity. Where someone sees enjoyment, another sees boredom.  

Research suggests that about 50% of our general disposition and overall life satisfaction are influenced by our genes, the factory settings we are born with. But that leaves the other 50% which can be affected by our experiences, our environment and the knowledge and skills we acquire.

When it comes to money, as I’ve explained before (see my blog What’s your money motivation?), your attitudes and beliefs about it are greatly influenced by your childhood. Sometimes this is helpful, but sometimes it isn’t. One unhelpful money message is that it’s scarce and hard to come by – what is known as a ‘scarcity money mindset’.

A scarcity money mindset can be damaging to your financial wellbeing because it can make you adopt a victim mentality.

A scarcity money mindset can be damaging to your financial wellbeing because it can make you adopt a victim mentality. This means you can think you have no control over your future and that for one person to win another person must lose. The idea that everyone can win, and benefit isn’t usually considered, and you will usually approach financial situations and decisions with a sense of foreboding, fear, worry and even hopelessness.

If you think that money is scarce there is a danger that you’ll spend too much on fun and things as soon as you get it, thereby finding it hard to build financial assets.  Or it might make you reluctant to spend what you make, thereby potentially missing out on enjoyable life experiences and opportunities.     

Focus on the right things

And while it’s important to be intentional about what you spend your money on and feel in control on a day to day basis, a scarcity mindset can make you focus on trying to save money on inconsequential things that don’t improve your quality of life.

For example, buying an expensive car on finance is likely to cost far more money than you can ever save wasting time and energy collecting shopping loyalty points or looking for money off coupons. If you avoid buying things you can’t afford you won’t need to penny pinch and can put your time and energy into more productive or enjoyable activities.   

A scarcity money mindset can also affect your ability to take risks. While it’s very important to consider the downsides of what can go wrong financially, you also need to balance those risks with the potential rewards.

For example, you might have a ‘steady’ job that you tolerate but don’t like or love, but which pays the bills. If you have a scarcity mindset you’ll probably focus on the disruption and potential loss of income that might arise from changing careers or starting your own business, rather than the potential for increased freedom of choice and financial rewards it might bring.

From scarcity to abundance

If you can change your money mindset from scarcity to abundance, you increase the probability that you’ll see opportunities rather than problems, attract like-minded people and overcome financial obstacles.

Stephen Covey coined the term abundance mentality or abundance mindset in his 1989 best-sellerThe Seven Habits of Highly Effective People. Covey defined it as” a concept in which a person believes there are enough resources and successes to share with others.”

Executive and Leadership Coach Katia Verresen gives some common examples of how to determine whether your mentality is one of scarcity or abundance in a helpful graph:

Abundance framework.png

Source: First Round Review

Learn from the leaders

The simplest way to develop an abundance money mindset is to learn from thought leaders in the field. As well as Covey’s book, and Verresen’s material you should also read biographies of successful people, listen to relevant podcasts and watch TED Talks.

Peter Diamandis is one of my favourites speakers in the area of abundance mindset and his TED Talk is well worth watching   Peter’s website is also worth visiting.

You might not be able to change your genes, but you can improve your knowledge and understanding of how to develop an abundance mindset. Do that and you will be well set to also improve your financial wellbeing.

Do let me know how you get on.

Warm regards


Jason Butler