Create an abundance mindset for a strong financial future
Mainstream retirement planning focuses on fulfilling a basic need—in doing so, it can disregard the idea of building wealth.
Building wealth is about generating long-term income through multiple sources including savings, investments, and any other income-generating assets, and it’s the key to a strong financial future.
The success to which we build wealth heavily depends on our mindset around finances, and money in general. Our mindset around money can greatly impact wealth building and financial security. It influences our everyday decisions and dictates how we spend our money.
There are two types of mindsets that explain our relationship with money: abundance and scarcity. Which is the best mindset to adopt and is one holding you back? Let’s find out.
What is a scarcity mindset?
A scarcity mindset is that persistent, nagging feeling of not having enough. It could be the feeling of not having enough money, time, food, or emotional connection.
In a scarcity mindset, you can’t focus on anything else. You’re always thinking about the lack of something in your life.
This way of thinking is like putting blinders on. You become hyper-focused on specific goals and forget about the bigger picture. For example, if the stock market is crashing you may rush to sell all of your stocks and take a loss instead of being patient and waiting for the market to recover.
What is an abundance mindset?
On the flip side, someone with an abundance mindset believes that there’s enough to go around. This type of mindset keeps you open to new and exciting possibilities.
People with an abundance mindset tend to give a lot and want to “spread the wealth”. They offer up their time, energy, and money into things that they care about.
They also have a high level of personal worth and security. Instead of focusing on what you don’t have, an abundance mindset makes you appreciative of what’s in front of you.
Abundance vs Scarcity Mindset
The differences between an abundance and scarcity mindset are pretty clear. If you have a scarcity mindset, it means that if someone else ‘wins’, then you ultimately lose. While someone with an abundance mindset believes that there are enough resources to go around for everyone.
For example, if someone with an abundance mindset is in the running for a promotion at work, they will put everything they have into that opportunity. With a positive attitude, that person will do everything they can to secure that promotion. And odds are, they will get it.
On the other hand, someone with a scarcity mindset in that position won’t put in that extra effort, because what’s the point. They probably won’t get the promotion anyway. Plus if they did get that promotion, they would more than likely get fired because they couldn’t handle the extra responsibilities.
Signs you may have a scarcity mindset
If you resonate with one of all of these statements, you may be stuck in a scarcity mindset:
1. You constantly worry about money
Of course money is important, but is it all that you think about? Does the idea of money and your financial future keep you up at night?
Even if you’re living with debt, you can still live a full life if you have a plan to rectify it. Debt doesn’t have to control your life.
2. You always feel behind and can’t enjoy the success of others
That feeling of constantly needing to catch up to those around you isn’t a positive attribute like determination or hustling, it’s mentally draining. If you find yourself feeling down about the success of others, it may be a scarcity mindset that’s clouding your emotions.
3. Debt, bills, and other responsibilities pile up
A scarcity mindset leaves us hyper-focused on certain things, so when that happens, other areas in our lives suffer. For example if you become so focused on your 401k and pour in all of your energy and resources into that one thing, your other financial responsibilities will pile up.
4. You over-schedule yourself
We all over-schedule ourselves sometimes, but if you find that you’re constantly booked with no down time, that’s a clear sign of a scarcity mindset. Oftentimes, we over-schedule because we feel like we aren’t doing enough. We feel like we’re behind and need to ‘catch up’ to those around us.
You also may find yourself saying yes to so many opportunities that aren’t right for you because you're afraid that nothing else will come along.
5. You always compare yourself and your success to those around you
Life isn’t about one-upping those around you. Just because one person found success in a new investment opportunity, doesn’t mean that you have to find a new investment and find even more success. If you feel like you need to keep doing more to be on the level of those around you, that’s a scarcity mindset taking over.
How a scarcity mindset can impact your retirement and financial goals
The volatility and uncertainty of the market doesn’t mix well with a scarcity mindset. If you find yourself thinking:
“I’ll never be able to retire. I’ll have to work forever.”
“I need to sell and cut my losses before I lose more.”
These are thoughts that don’t just affect your financial and emotional well being, but your ability to reach your retirement goals.
Now, that’s not to say that these kinds of thoughts are abnormal. When the stock market crashes and plans don’t happen the way we originally anticipated, it can be unsettling and scary (which is another reason why it’s important to have a diversified portfolio).
The good news is that we can change and evolve our mindset to be more positive and set us up for future success. An abundance mindset is achievable for everyone!
How to shift your scarcity mindset into one of abundance
As you work on shifting your scarcity mindset to one of abundance, keep these things in mind:
1. Appreciate what you have
If you have a home, job, and food on the table, then you already have more than a lot of other people in the world. Take some time every day to write down what you’re grateful for. That could be your family, your health, your dog—anything! You could even be grateful for the Chinese takeout you had for dinner.
It may seem silly at first, but when you actively practice gratitude you stop thinking about everything you don’t have and focus on all of the great things that you do have.
2. Stop comparing yourself to others
Have you ever heard of the saying that comparison is the thief of joy? When we compare ourselves to someone that we know or saw on social media, it gives us unrealistic expectations of what success looks like and how we can get there.
Instead of comparing yourself to others, look to leaders and experts for inspiration. There’s a big difference between those two concepts.
Focus on you, your goals, and what you value.
3. Surround yourself with abundance minded people
You are who you hang out with. The people we choose to interact with and spend our time with influence our thoughts and decisions.
Are you inspired by the people you spend time with? Do they make responsible decisions? Do you feel supported and encouraged by them? If not, then maybe it’s time to venture out.
4. Be proactive and stay educated
A scarcity mindset can be fueled by insufficient knowledge of finances and investing. Many people have a lack of financial literacy due to their upbringing or just little interest in the field, but understanding the basics of finances and investing can help put your mind at ease when a potential crisis happens.
Get started on the road to abundance
In general, a positive mindset reaps a positive result, and vice versa. It may seem impossible to have a positive mindset when it comes to investing, but that’s where Hedgehog Investments comes in. We developed an investment model that allows investors to earn higher returns, with lower risk, so you can put your mind at ease. Learn more about our model here or get in touch with our team!
This material is intended for informational purposes only and should not be construed as legal or tax advice. Information here is not intended to replace the advice of your investment advisor or financial advisor. This information is not an offer or a solicitation to buy or sell securities. This information may have been compiled from third-party sources and is believed to be reliable. All investing involves risk, including the loss of principal.