Scarcity Mindset: How It Can Impact Your Kids
Scarcity Mindset: How It Can Impact Your Kids
What’s holding you back from growing wealth and passive income? Could it be something inside your head?
Is it negative, fearful thoughts focused on what you don’t have?
This certainly could be the case whether or not you realize it.
Unfortunately, many of the preconceived notions we have about money and wealth start in childhood.
What did your parents say about money?
Are you passing along these same lessons your parents, coaches and teachers taught you about money to your kids? Or can you make them think in a way other than what you were taught?
Is it possible to plant an abundance mentality seed in their minds at a young age, rather than the scarcity mentality seed that usually never grows larger than a financial sprout?
Growing up, I heard some of those scarcity phrases that made me think twice in my decision making.
It wasn’t uncommon to hear my parents tell my brother and I:
- “That costs too much.”
- “We don’t have THAT kind of money.”
- “It must be nice to go on trips like they do.”
- “We can’t afford that.”
Growing up, I did what most of us do, spent time and effort learning about how WORK works.
Instead, I should have focused on learning about how money works as it’s the only reason people go to work.
That was the takeaway that made me start to care about money and learn that it really does matter.
What Does Scarcity Mentality Mean?
The scarcity mindset means that one believes that they don’t have enough of what they need in life. This could be time, intelligence or money.
Having this mindset can result in feelings of fear, stress, and anxiety.
Scarcity mindset folks were probably the ones snatching up all of the toilet paper during the pandemic shut down!
In Stephen Covey’s book, The 7 Habits of Highly Effective People, he discusses the scarcity mindset vs abundant mindset.
He explains that when you live in a world of scarcity, you’re constantly competing for available resources, even when they are abundantly available.
Does this sound familiar?
Usually this comes from how we were raised. The “we can’t afford that” statements our parents would tell us leaves a negative imprint about money that we carry on throughout our lifetime.
This builds a mindset of scarcity. Today, many of us continue telling others “we can’t afford X” even though we can. Saying this around our kids closes their mind (and yours).
Instead of “we can’t afford it” ask “how can I afford it?” It opens the mind to what can I do to earn money.
By doing this, you go from scarcity to abundance just by changing the words that you use when you speak to yourself and to your children about money.
Let’s take a look at the complete opposite of the scarcity mindset….Join the Passive Investors Circle
What Is An Abundance Mindset?
Covey defines the abundance mindset as one that flows out of a deep inner sense of personal worth and security.
It’s grounded in the belief that there is more than enough for everyone.
People that are able to think long term vs short term are using an abundance mindset.
They realize that just because you don’t have something NOW doesn’t mean you can’t get it later.
For example, someone who doesn’t have a million dollars NOW, doesn’t mean they can’t have it later. They realize the opportunities are unlimited and to always keep an open mind.
Who do you think is happier? Scarcity or abundant mindset people? If you guess abundant then you’re right. They tend to be more content and willing to help others out. They know that it’s not ONLY about themselves.
Would You Rather Live Below Your Means Or Expand Them?
I’ll admit, I’ve told myself and others to “live within or below your means” in order to become wealthy.
It’s what I’ve always heard supposedly successful people teach it.
- What are you telling your kids?
- What does your self-talk instruct you to do?
Live below your means?
This does nothing but stifle ambition again stemming from the scarcity mindset. Instead, we can use the same efforts to expand our means rather than contract them.
I think it’s important to teach our children to spend their time and energy in developing ways they can expand their means as we live in a world of abundance.
Words are powerful and by doing this, you’re more likely to ignite and tie into an entrepreneurial spirit.
Maybe this is one of the reasons that Robert Kiyosaki teaches in his Rich Dad Poor Dad book is: “Don’t live below your means, expand your means.”
Kids & The Instant Gratification Cycle
One of the biggest issues children have today is something called instant gratification. We’re raising an entitlement generation that stems from instant gratification.
I’ll admit that there’s something in me that wants my kids to have what I didn’t have growing up. Maybe this is one of the reasons why we love to travel as we didn’t too much growing up besides an occasional beach trip.
I started a lawn service in junior high that I kept until moving off to dental school. As a youth, I never owned a credit card.
If I wanted something, I would:
- Set a goal
- Plan for it
- Work and save
- Make the purchase
That process built confidence and self-esteem.
As a parent, I encourage you to NOT let go of that concept.
It’s OK to allow your kids to want for something.
Teach them about how to set a goal, create steps to achieve it and celebrate with them.
That’s how you help them build self-confidence and the ability to understand that they can do it.
- Child: “I want a new x-box game.”
- Mom: “Ok honey, let’s order one online.”
- Child: “Thanks mom, you’re the best!”
This is the instant gratification model that builds the expectation of entitlement.
Here’s a different tactic:
- Child: “I want a new x-box game.”
- Mom: “It’s $40 on Amazon and you earn $5 a week doing chores. How many weeks is it going to take you to save enough allowance to buy that?”
- Child: “8 weeks but I want it sooner.”
- Mom: “What else can you do to help around the house or to help mom and dad to get the money that you need to buy the game?”
- Child: “Some of my other friends are babysitting the neighbors. Maybe I can do that?”
Notice the difference?
Don’t Miss Any Updates. Each week I’ll send you advice on how to reach financial independence with passive income from real estate.Sign up for my newsletter
“We don’t need no education“… – Pink Floyd
When our kids were young, I wanted them to attend the elementary school that I went to. It was also a convenient one block from our house.
Due to overcrowding issues, parents would line up several hours ahead of time on sign-up day in order to grab one of the limited spots.
Some even started camping out the night before!
Again, we all want what’s best for our kids. Reflecting back on this situation, my scarcity mindset was telling me that there was only one good school option when I knew that there were many others.
The school they attended for first and second grade wasn’t going to make or break their careers.
The deeper concern comes to play when you don’t think you’re going to look good enough as a parent if you’re not the one camping out overnight to get your kid in the right elementary school.
Scarcity mindset and comparison go hand in hand.
Are Your Kids The Center Of The Universe?
If parents aren’t careful, their scarcity mindset could make their kids think that they’re the center of the universe!
Let me explain.
If someone believes that they have limited means (money) then logically they should begin to save, right?
Think again. Humans are emotional and make decisions with emotions first then logic second.
This is the reason that scarcity is characterized by overspending.
Because we think money is limited, then we must:
- Treat ourselves now because the deal will vanish.
- Spoil our kids because we want them to have the best we can get for our limited supply of money.
Who wants their kids being picked on for not having the best pair of Jordans, the latest iPhone or heaven forbid a BMW when they turn 16.
When we try to deceive our scarcity mindset by overindulging then our kids can become caught in the middle. They’re taught that no matter what, their needs are always URGENT when they see their parents respond to life with a perceived lack of resources.
Is that the legacy you want to pass on to your kids, that they think the world revolves around them?Join the Passive Investors Circle
How To Parent With Abundance
Now we’ve come to understand that having a scarcity mentality will make us anxious about the future.
If we teach our kids that we don’t believe we have enough money then we’ll never change our current status in life.
They’ll realize that this unwillingness to change stems from the possibility that we’ll lose everything we have and that’s NOT something we should teach!
Instead, we should focus on replacing our scarcity mindset with an abundance mindset to ensure our kids learn the right way.
How do we go about doing that?
Here’s 3 ways to help…
3 Steps To Parenting With An Abundance Mindset
#1 Be thankful
“Every good gift and every perfect gift is from above, coming down from the Father of lights with whom there is no variation or shadow due to change.” James 1:17
Nothing wipes out fear and anxious thoughts more than having gratitude in your life. Our pastor once informed us that you can’t be scared and thankful at the same time. True.
If you only focus on what you don’t have, you will always feel scarcity.
Being thankful for what you DO have starts shifting your mindset.
Gratitude frees us from feeling like there’s not enough because we recognize we already have so much.
“If you look at what you have in life, you’ll always have more. If you look at what you don’t have in life, you’ll never have enough.” – Oprah
#2 Let go of the past
If you were raised in a household that taught money was scarce, then focus on letting go of any negative views regarding finances.
The negative statements passed down to you have helped create a negative belief system about money.
We’re all born rich and have what it takes to thrive and do well in this world.
This is what we need to constantly remind our kids.
Remember, your future isn’t defined by your past.
Let it go.
#3 Learn from mistakes
When I initially started investing in real estate, I lost my rear end. If I’d quit then this blog wouldn’t have started.
A scarcity mindset causes you to believe that you’re a failure and your peers aren’t.
Let’s face it. EVERYONE makes mistakes and has set backs in life. Our kids aren’t going to make perfect scores on every test or win in every sport they play.
The sooner they realize this the better.
When life gives you lemons, look for the positives that arise from that situation.
Rocky – “It’s NOT how hard you hit, but how hard you can get hit and keep moving forward.”
Great article. I remember when I was in grade school and wanted a new 10 speed Schwinn. My parents said they would pay a third. The bike cost $112. I worked all summer to save up my 2/3 and bought the bike. I rode it through medical school. I’m adding this to my Fawcett’s favorites this week.
Dr. Cory S. Fawcett
Financial Success MD
Thanks Dr. Fawcett and thanks for all you do for the medical community regarding teaching us about finance!
We are trying this out with my 4 year old. We don’t want it attached to a dollar amount so he earns stars on the white board. Good activities and good behaviors earn him a Star. When he has 20 stars he can cash in to “buy” things.
The most recent 20 star items are big LEGO sets that run $79! (He is 4 and loves building these massive legos).
When he gets older, we’ll use real money but this works very well for now.