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Financial scarcity can be mentally crippling A Scarcity Mindset Can Cost You Mentally and Financially

All of the supply stores heard about it in 2020. Rationing lots of pantries and wiping down cabinets, people shelled out for toilet paper and soap at home, urgently.

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In 2020, it was everywhere in supermarkets. The once-stocked bathrooms now lacked even basic necessities like toilet paper and hand soap. We stayed inside, scrubbing everything down to the bare wood, and occasionally went out into the dangerous COVID-19 environment to find the last bottle of hand sanitizer within a fifty mile radius. We felt helpless, so we took care of the only thing we could: the things in our kitchen and bathroom cabinets.

This inclination can prove helpful on occasion. According to Courtney Cardin, co-founder of the in-development financial wellness and investment platform Aura Finance, “it helped humans survive back in the day when we faced existential threats from nature.” A relative of everyone here reaped the benefits of focusing on scarcity.

However, a scarcity mindset can backfire when it isn’t motivated by an actual need to escape from hungry lions or store an entire season’s worth of food without refrigeration.

What it costs in tears and dollars when you think there isn’t enough

Inflation or disruptions in the supply chain are two examples of external factors that can make it more difficult to get your hands on the goods you need and reach your financial goals.

Susan Greenhalgh, an accredited financial counselor and the founder of Mind Your Money LLC in Providence, Rhode Island, says, “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.” “That’s a very vigilant stance, and it’s a tough stance from which to take pleasure in life.”

Because of the anxiety associated with making any kind of investment, people under constant pressure may be dissuaded from putting any money toward building their wealth. Another option is to spend lavishly out of fear that essentials will become unavailable. It’s tough to make long-term plans when you’re worried about the here and now.

In your haste to secure victory, you may resort to inefficient or even dangerous strategies. When it comes to your personal finances, “every product you see out there is a potential solution for you,” says George Blount, CEO of Boston’s nBalance Financial, a financial therapy and wellness practice. It’s going to look like the lottery is a better bet. A brighter future awaits cryptocurrency. However, you should carefully consider whether or not cryptocurrency is a good fit for your overall financial situation, and remember that only one person won the billion-dollar prize. That person probably isn’t you, unless you’re reading this while lounging on your brand-new superyacht.

Here’s how to put your phobias to good use.

Anxiety is a negative feeling, but it can also be a motivating emotion that gets you moving. You can get a better idea of where your money goes each month and where you might be able to cut back by, for instance, reading through some recent bank and credit card statements.

If you want to feel more secure that you can handle an unexpected expense, setting up automatic transfers of money into an emergency savings account is a good idea. Maybe you revise your resume every time there’s a rumor of layoffs at work. You will be ready to start looking for a new job immediately regardless of the outcome.

Obsessing over the stock market, falling for quick-money schemes, or keeping a constant eye on the news is counterproductive. People are shouting, many of whom aren’t fully aware of the situation but have strong opinions about it nonetheless. Allow yourself some time to reflect on your wants and needs so you can make reasonable financial projections and prepare for the worst.

Greenhalgh suggests taking some time to reflect in silence. “Once we make that connection between our thoughts and our finances, we can quiet the world down a bit.”

Personal finance platform NerdWallet supplied this column to the AP. NerdWallet’s resident writer, Sara Rathner. Write to me at srathner@nerdwallet.com. Sarah K. Ratner’s Twitter handle is @SaraKRathner.

NerdWallet is fortunate to have Sara Rathner on staff. For more information, contact Sara Krathner via email at srathner@nerdwallet.com or on Twitter at @sarakrathner.

The author acknowledges that the article’s original home is NerdWallet.com.