A Scarcity Mindset Will Make You Miserable But Potentially Richer

I’ve written about the importance of having a strong money mindset to get richer. But what I’ve also realized is having a scarcity mindset can also make you richer as well! Could both mindsets lead to good fortune?

Let’s explore.

The Fire Alarm Goes Off

Our home’s fire alarm started going off one morning, so I immediately started searching thru every room upstairs for the source. You see, once one alarm goes off, all of our other fire alarms start to go off too because they are all hard-wired into a system, like The Borg in Star Trek.

The fire alarms kept beeping and pausing at 15-second intervals. Given my wife was two floors down, I texted her to see if the source came from down there. I didn’t get a response.

Given there could be a fire, I rushed downstairs in frustration to see what was going on. My wife had just come out of the shower and deduced the alarm right outside the bathroom was the culprit. She had left the bathroom door open to help release the steam in addition to leaving the exhaust fan on.

It seems the water vapor from her steam shower likely triggered the alarm. She believed this to be so because the fire alarm was also triggered a couple of months ago when she took a long shower with the bathroom door open.

I was pleased she had identified the cause for the fire alarm going off but also annoyed that she hadn’t responded to my message. If there is ever a chance of a fire, I want an immediate response.

Then I realized something else. My scarcity mentality had caused me to be unpleasant with my wife.

Three Minute Showers: Scarcity Mindset

Both my grandfather and father served in the U.S. Army. Both told me about how they only had three minutes to shower or else they’d be reprimanded. As a result, I adopted their rule and seldom shower for longer than three minutes.

My wife doesn’t follow the three-minute shower rule. Instead, she enjoys taking 15-20 minute showers. As a result, I blamed her lengthy shower time for the accumulation of water vapor that caused the fire alarm to go off.

If she had just taken a three-minute-or-less shower like I do, then the alarm would never have gone off! After calming down, I had a moment of clarity where I realized I was being a hyper-sensitive jerk.

First of all, I can easily take quick showers because I’m a guy with short hair. Second, I like to save money on our water bill, even if it’s an insignificant amount. Finally, I have this fear that showering too long will cause excessive wear and tear on the plumbing. I’ve had to deal with stressful plumbing problems in the past.

Hence, in my mind, the less water we use, the fewer plumbing problems, the lower our bills. But the cost of thinking in this way hurts our relationship, which is way more important than money.

Extending Scarcity With Electricity, Food, And Time

Having a scarcity mindset creates unnecessary anxiety and stress. If you suffer from any type of chronic pain, like chronic back pain, one reason could be due to having a scarcity mindset.

Here are more examples of scarcity mentality that are probably unhealthy.

Electricity Scarcity

I find myself constantly turning off the lights in rooms, sometimes even if other people are in them!

I do so because I want to save on electricity. But I also do so because I know each one of our recessed lights has a shelf life. Once those 10,000 hours are up, I’ll have to buy a new custom bulb, get on a step ladder, and install it. What a pain.

But the incremental cost of electricity is low and the bulbs are also inexpensive. Therefore, I shouldn’t worry about turning off unused lights. But my scarcity mentality prevents me from letting go.

Letting go of the little things reduces our anxiety and improves our agreeableness.

Related: Stop Frugality From Leading To Lifestyle Deflation

Food Scarcity

Having a food scarcity mindset may result in eating more than we should because we are uncertain whether we’ll have enough food to eat in the future. As a result, we may gain more weight than is healthy.

I either always finish everything on my plate or take leftovers to go. I don’t waste food because I grew up in countries in the 70s and 80s where food was not abundant for everyone, e.g. Zambia, Malaysia.

When I wasted food I felt like I was insulting the very people I had observed who seldom had enough to eat. Besides, my mom would scold me for not eating every out of my bowl.

Growing up in poor countries and subsequently visiting poor countries for business created my fear of ending up poor and hungry. Fear is my main motivator for achieving financial independence. If I didn’t get good grades, stay late at work, or build a network of friends, I feared ending up broke, hungry, and alone.

But maybe wasting food on occasion is OK for safety and freshness now that we have kids? If I changed my mindset, I would be more OK with eating less at social events because I feel embarrassed to take food home in front of others.

Time Scarcity

In terms of time, my scarcity mindset goes into overdrive. Because one of my friends died at age 15, I have this concern about whether my life will also be prematurely truncated. As a result, I have a problem when it comes to squandering time.

For example, I got sick and tired of attending meetings about meeting while I worked in finance. The lack of efficiency drove me nuts because it wasted so much time. As a result, I decided to retire early in order to work at my own pace.

Feeling time scarcity made me lose a lot of potential career earnings for more freedom because I have a fear my life will be cut short. In addition, feeling time scarcity doesn’t let me relax for a long period of time, which is healthy to enable the mind to heal and recharge.

I envy the people who can go for a long walk and sit on a park bench and do nothing for hours. This inability to chill for a while leads to a more frenetic life. In turn, this puts more pressure on my wife to do more. If she doesn’t match my pace, she feels guilty, which is no good.

But Scarcity Mentality Can Also Make You Rich

Although having a scarcity mentality can be debilitating, it can also make you richer than the average person. The first reason is that a scarcity mentality will force you to save more money.

I don’t treat water, electricity, food, and time as infinite resources. As a result, I use less of them and save more money than the average person who doesn’t have as great of a scarcity mentality.

With more savings, I can invest more money into risk assets that have the potential to increase in value over time. And that’s exactly what I’ve done since 1995.

Appreciate Time More

Another way scarcity mentality can make you richer is by encouraging you to pack as much as possible into a certain amount of time. By thinking you don’t have as much time as others, you tend to save more and work harder so that you can gain more freedom before you die.

This phenomenon is called Parkinson’s Law. It is the idea that work expands to fill the time allotted for its completion. If you artificially limit time, you will get more done.

Think about a school project that counts for 80% of your grade. If you have nine months to complete the project, you won’t appreciate the sense of urgency. You may waste a lot of time doing irrelevant things and not start on the project until the eighth month.

Now imagine if you only had one week to complete the project instead. You would go into overdrive immediately to get the project done on time. A scarcity mentality helps you do more things now to reduce feelings of regret in the future.

The Less You Have Of Something, The More You Appreciate It

Growing up with everything isn’t a good idea. You would naturally take things for granted because you’d already have everything. I’d much rather have my first car be a beater than a Ferrari! This way, if I ever were to buy a Ferrari, I’d appreciate it so much more.

My wife and I constantly struggle with how much to give our children and how much to help our children complete difficult tasks.

I’m more on the tough love side where I want my kids to suffer enough in order to better appreciate their future successes. For example, I want them to do a lot of manual labor until they leave for college.

My wife, on the other hand, is kinder and more nurturing than me. She also doesn’t have a scarcity mentality despite growing up in a poorer household. As a result, our children go to her first whenever they hurt themselves.

The Cost Of Having A Scarcity Mindset

The world is a cruel place. One day, we will no longer be around to protect our children from bullies, accidents, betrayals, and disappointments. Therefore, I think going the tough love route sets our children up for greater resiliency and success in the future.

There will come a time in everyone’s life when they can only take three-minute showers. Sometimes, during those three minutes, there won’t even be any hot water. When that time comes, having a scarcity mindset will help because you might not even notice the difference.

Just don’t forget the cost of having a scarcity mindset. If your scarcity mindset is making you miserable or causing strife with your loved ones, it may be best to make adjustments. You could save all the money in the world, but if you don’t have a healthy relationship, then what’s the point?

Reader Questions And Suggestions

Do you have a scarcity mindset? If so, why do you think you do? How has having a scarcity mindset helped you grow as a person and get richer?

Listen and subscribe to The Financial Samurai podcast on Apple or Spotify. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Please share, rate, and review!

For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

About Author