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Millennial Money: A Scarcity Of Money Mentality Can Cost You

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We’ve all seen it in grocery stores in 2020. The shelves, once stocked with toilet paper and hand soap, were bare. We’ve been hiding in our homes, deep cleaning every surface, sometimes braving the threat of COVID-19 to hunt down the last bottle of hand sanitizer within an 80km 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 is playing out differently, due to rising prices, a volatile stock market and whispers of an impending recession. We have simply turned one set of worries into another, continuing to assume that all our resources are scarce, whether that is true for us or not.

If the current situation makes you avoid long-term planning or if you are afraid to spend money, even on things you need, you are living in a scarcity mindset. It basically means that you consider your resources – like money, food, and employment opportunities – to be limited. And when you’re concerned about accessing those things, it’s natural to want to grab whatever you can.

Sometimes this impulse is useful. “It helped humans survive the days when we faced existential threats from nature,” says Courtney Cardin, co-founder of Aura Finance, a financial wellness and investing platform that is currently in development. private test phase. “Everyone here had an ancestor who benefited from a scarcity mindset.”

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


Factors beyond your control, such as inflation or supply chain shortages, can limit your access to the things you need and make it more difficult to meet your financial goals.

“You can imagine it’s not a very nice place, to be a little on guard, thinking you have to keep everything you have, that you’re going to lose it somehow. “, says Susan Greenhalgh, accredited financial advisor and founder of Mind Your Money LLC in Providence, Rhode Island. “It’s kind of a vigilant point of view, and it’s a very difficult point of view to enjoy life.”

Ongoing stress can cause you to hoard cash in a savings account because you’re afraid to invest, which could limit 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’re worried the items you need will disappear from stores. When you have short-term anxiety, it’s hard to plan a few years or even months ahead.

You can even make ineffective or risky moves to try and lock in some wins. “Every product you see is a potential solution for you,” says George Blount, founder of nBalance Financial, a financial therapy and wellness practice in Boston. “The lottery is going to look much better. The cryptocurrency will look much better. But cryptocurrency may or may not suit your overall financial situation, and one lucky person won that billion dollar payout. Unless you were reading this from a lounge chair on your new superyacht, that probably wasn’t you.


Although anxiety is terrible, it can be a productive emotion that drives you to action. Reading some recent bank and credit card statements, for example, can give you a better idea of ​​where your money is going each month and how you could cut spending.

Setting up automatic cash transfers to an emergency savings account can help you feel more confident that you’ll be able to handle an unexpected expense. Or maybe you’re updating your resume because you’re worried about layoffs at your company. Whether it ends up happening or not, you will be ready to seek employment at any time.

What isn’t productive is obsessively following stock prices, falling into get-rich-quick schemes, or constantly watching the news. There’s a lot of shouting, often from people who don’t fully understand what’s going on but still have opinions about it. Give yourself the time and space to figure out what you really need and what you really need, so you can set appropriate financial goals and develop a plan if things don’t go your way. hope so.

“We have to stop and shut up and understand these things,” Greenhalgh says. “Once we’ve done that, when we have our financial connection in mind, we can tone down the noise a bit.”


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

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