Psychology of Money: 12

Over at http://www.accumlatingmoney.com/, Clint explains that scarcity thinking can be summed up by these attitudes:

“there isn’t enough”

“more is better”

“that’s just the way it is”

Scarcity mentality operates from fear and is based on the belief that money (or love or power or land or a job or a parking spot) is a finite resource – once these things run out there’s no more left over ever after. Mainstream economics bases most of its principles on this basic idea.

Abundance thinking on the other hand, comes from a more expansive set of emotions and beliefs. Clint sets out three premises of abundance:

  1. Money is like water – it isn’t about how much you have, it’s about what you do with it
  2. What you appreciate, appreciates – use your money to invest in things you value
  3. Collaboration creates prosperity – cooperation trumps competition

Scarcity is the territory of governments, marketers and economists. There’s only so much to go around; this is what they need us to believe. Abundance thinking tends to be the way of religious organizations, social ventures and more primitive societies where money has little value compared with a strong network of family and friends caring for the entire village.

There are generational aspects to these mentalities as well – baby boomers tend to believe in scarcity, generation Y tends to believe in abundance (or at least they did prior to the 2008 financial crisis.) Ironically those that lived through the Great Depression, when material scarcity was an indisputable fact, relied on the power of communities scraping by and often developed the sort of trust and cooperation that is only possible when we believe that there is enough.

Author, consultant & former Yahoo exec, Tim Saunders believes abundance is the only way forward. In this short video he explains what scarcity costs us. While his focus is on the work place – everything he says applies to any sort of scarcity thinking including the fear that we don’t have enough money.

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