Author Topic: Scarcity mindset  (Read 4477 times)

PoutineLover

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Scarcity mindset
« on: November 30, 2016, 12:20:51 PM »
I have noticed that when money is tight, I have an urge to spend more, and it's detrimental to my finances. It isn't huge amounts, but it's enough little things to strain my budget even more when it's already not great. It seems like expensive things happen all at once, and sometimes it's a few voluntary things at the beginning of the month, then turns into a few big bills at the end, and suddenly I'm overextended and I still have a week until payday. Anyway, I know the easy answer is just say no, but it's like my judgement slips and then it's too late. How do you cope with this? The situation isn't too dire, but I will have to dip into my emergency fund to pay my tuition, and I didn't want to do that. Any advice, strategies, personal experiences with this sort of issue are much appreciated.

NoStacheOhio

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Re: Scarcity mindset
« Reply #1 on: November 30, 2016, 12:27:06 PM »
I have noticed that when money is tight, I have an urge to spend more, and it's detrimental to my finances. It isn't huge amounts, but it's enough little things to strain my budget even more when it's already not great. It seems like expensive things happen all at once, and sometimes it's a few voluntary things at the beginning of the month, then turns into a few big bills at the end, and suddenly I'm overextended and I still have a week until payday. Anyway, I know the easy answer is just say no, but it's like my judgement slips and then it's too late. How do you cope with this? The situation isn't too dire, but I will have to dip into my emergency fund to pay my tuition, and I didn't want to do that. Any advice, strategies, personal experiences with this sort of issue are much appreciated.

What kinds of things? To me, it seems like the easiest place for this to happen is with food, a nice hot Starbucks when you're stressed, eating out because you're too tired to cook and don't have anything in your fridge, etc.

Those kinds of expenses can usually be minimized with planning (and deliberate follow-through).

You may just need more cash buffer, or a more realistic budget. Are these unplanned, but somewhat predictable expenses (car/house repairs)?

Zikoris

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Re: Scarcity mindset
« Reply #2 on: November 30, 2016, 12:55:54 PM »
I think planning helps a lot. For example, it's a lot easier to cook if you have all the ingredients on hand to make fast, easy meals, and have already decided what you're making.

I don't really have this problem, but my boyfriend gets this way with leftovers. If we have tons of food, he eats normally. If we just have a few containers left, his appetite doubles and BOOM everything's gone, and I don't get the day off cooking that I'd hoped for. The only solution I've found is to just make massive amounts of food, then eat them down until we run out, and plan to cook again whenever we run out, rather than plan to cook again on a specific day. That way I get days off cooking and he gets to do whatever the primal part of his brain tells him to.

Del Griffith

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Re: Scarcity mindset
« Reply #3 on: November 30, 2016, 01:27:52 PM »
You'll have to find what ultimately works best for you, but for me, some of the following has been helpful. When I used to go into the pet store for food, I would bring only enough money to buy the food I was picking up. I knew that when I stood in line, I would stare at all the treats and toys and nonsense and want to buy them all for my cat, so in order to avoid the temptation, my wallet stayed in the car while I ran in. It was just the little things like you mentioned. Like the other comments said, food planning goes a long way and helps you keep inventory on what you have or don't have in your kitchen to avoid overpurchasing. Similarly to grocery shopping, if you have to go to another store for stuff, like gifts, stick to your list. Also, depending on what you are buying (non-food items), are there things that could be returned? I have become big on returning things I don't end up needing or buy too many of. If you keep your receipts, see what is actually used and purposeful by the end of the month, and then get your money back for whatever you don't use.

CarrieWillard

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Re: Scarcity mindset
« Reply #4 on: November 30, 2016, 01:50:38 PM »
Scarcity makes us stupid. It literally robs the brain of IQ points. So, when money is scarce, we do dumb things which are counterproductive.

What I find that helps is to have a list of things I enjoy, that make me feel good, that are free or super super cheap. Such as:

- reading a library book in bed
- going to bed super early
- taking a bath with candles, a glass of wine ($3 chuck)
- fancy homemade teas and coffees
- dark chocolate
- hugs and snuggles with my loved ones
- reading to my kids
- watching a free Amazon movie
- going for a walk or bike ride

Cheap guilty pleasures.

mrcheese

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Re: Scarcity mindset
« Reply #5 on: November 30, 2016, 08:26:24 PM »
Scarcity makes us stupid. It literally robs the brain of IQ points. So, when money is scarce, we do dumb things which are counterproductive.

What I find that helps is to have a list of things I enjoy, that make me feel good, that are free or super super cheap. Such as:

- reading a library book in bed
- going to bed super early
- taking a bath with candles, a glass of wine ($3 chuck)
- fancy homemade teas and coffees
- dark chocolate
- hugs and snuggles with my loved ones
- reading to my kids
- watching a free Amazon movie
- going for a walk or bike ride

Cheap guilty pleasures.

This. I deliberately budget to BUY a coffee everyday if I want to, because just being able to do that makes me feel rich (grew up poor) and when I feel rich I make better long-term financial decisions. Fortunately I actually enjoy the $1 service station coffees...

tmitchell

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Re: Scarcity mindset
« Reply #6 on: November 30, 2016, 10:43:53 PM »
I totally understand the feeling and I have experienced it many times, even when flush. One way I solved that impulse is to obsess--as a game---about getting a "deal" on something I can actually use. The idea is to abate spending on nonsense, but sometimes I also use the strategy on stuff I don't need.

For instance: You know you're going to need to buy food, so try to find a favorite & usable product at a discount. Say you love tortilla chips: make it a project to find the best ones at the cheapest price. No, it's not the cheapest chips in the city, but somehow it tricks your brain into thinking you've got a good deal on luxury while actually having acquired something useful.

Or: You just "have" to buy something special. So create a self pampering event like a great bath that creates a sense of abundance. Again, find something you really like at the 99c store or whatever, and make it an event. A great candle, or some 1/2 price organic bubble bath. Then: luxuriate.

The idea is to create a sense of luxury without overspending. It's worked for me :).

Playing with Fire UK

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Re: Scarcity mindset
« Reply #7 on: December 01, 2016, 12:07:41 AM »
I don't really have this problem, but my boyfriend gets this way with leftovers. If we have tons of food, he eats normally. If we just have a few containers left, his appetite doubles and BOOM everything's gone, and I don't get the day off cooking that I'd hoped for. The only solution I've found is to just make massive amounts of food, then eat them down until we run out, and plan to cook again whenever we run out, rather than plan to cook again on a specific day. That way I get days off cooking and he gets to do whatever the primal part of his brain tells him to.

This totally happened to me when SO moved in. I'd make bigger and bigger amounts of food and he'd eat more and more. Then I stayed with his family for a while and found out that as soon as everyone has filled their first plate, all the food gets thrown away. There are never seconds or leftovers.

We both hate food waste but were going about it in totally different ways.

Playing with Fire UK

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Re: Scarcity mindset
« Reply #8 on: December 01, 2016, 12:47:55 AM »
Scarcity makes us stupid. It literally robs the brain of IQ points. So, when money is scarce, we do dumb things which are counterproductive.

This. Well done to the OP for nailing the exact issue. I've had the same experience but didn't know what or why. I'd been (relatively, not mmm) fine with money for years, then got into a vast amount of debt and at the time I needed to be making better decisions I was really fighting making good decisions. My turning point came when I got out of debt and felt like I had some spare income.

Have you tried giving yourself a token budget for totally frivolous purchases; maybe only $5, but something so that you can tell your brain that you have spare income?

I like the idea of going to the dollar or 99c store and seeing all the things that you can afford to create that feeling of abundance.

PoutineLover

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Re: Scarcity mindset
« Reply #9 on: December 01, 2016, 08:40:23 AM »
Thanks everyone for the great ideas and input! Glad to see I'm not alone with this feeling. I have a pretty decent budget for a normal month where I know my expenses, like groceries and regular bills. This past month I was a bit thrown off because I had to buy extra stuff like a transit pass, flea treatment, registration for a tournament, tuition fees and some other random costs. Each of those were small enough on their own, but they happened to all come at once and add up. I'm also going on vacation, so I knew I'd be spending money on that, but it still hurts to see my planned spending fund depleted. I can still pay for everything and I don't have any debt, it just means I have a little less money in the bank. Seeing a low balance stresses me out a bit and when I get stressed about money I think about it more and spend more, when really I should cut back on the extras. There is no exactly typical month, there will always be some irregular costs, and I have to foresee as many as possible and build in a buffer so I don't get caught off guard. I like the idea of little luxuries, or a small fun budget I can spend without worrying so I still feel like I have enough.

NoStacheOhio

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Re: Scarcity mindset
« Reply #10 on: December 01, 2016, 11:12:40 AM »
Thanks everyone for the great ideas and input! Glad to see I'm not alone with this feeling. I have a pretty decent budget for a normal month where I know my expenses, like groceries and regular bills. This past month I was a bit thrown off because I had to buy extra stuff like a transit pass, flea treatment, registration for a tournament, tuition fees and some other random costs. Each of those were small enough on their own, but they happened to all come at once and add up. I'm also going on vacation, so I knew I'd be spending money on that, but it still hurts to see my planned spending fund depleted. I can still pay for everything and I don't have any debt, it just means I have a little less money in the bank. Seeing a low balance stresses me out a bit and when I get stressed about money I think about it more and spend more, when really I should cut back on the extras. There is no exactly typical month, there will always be some irregular costs, and I have to foresee as many as possible and build in a buffer so I don't get caught off guard. I like the idea of little luxuries, or a small fun budget I can spend without worrying so I still feel like I have enough.

None of those expenses were really unpredictable though. I think you need to just "zoom out." Make a budget for the year that includes periodic expenses like tuition, transit, pet bills, etc. From there, you can reassemble your monthly, and figure out where to put the money you'll need three months from now.

Playing with Fire UK

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Re: Scarcity mindset
« Reply #11 on: December 01, 2016, 02:26:05 PM »
I like the budget spreadsheet here: http://www.moneysavingexpert.com/banking/Budget-planning

It encourages you to identify weekly, monthly and annual costs, and will catch a lot of the costs that you can forget (it was designed for use in the UK so not sure if it is right for you, but the framework of the spreadsheet is pretty good).

Playing with Fire UK

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Re: Scarcity mindset
« Reply #12 on: December 01, 2016, 02:30:11 PM »
Seeing a low balance stresses me out a bit and when I get stressed about money I think about it more and spend more, when really I should cut back on the extras.

How low is your balance? And is this all your money or do you have separate savings? If you can increase this (either short term with a transfer or long term by finding some more savings) then it may increase your level of comfort.

PoutineLover

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Re: Scarcity mindset
« Reply #13 on: December 05, 2016, 08:27:57 AM »
How low is your balance? And is this all your money or do you have separate savings? If you can increase this (either short term with a transfer or long term by finding some more savings) then it may increase your level of comfort.
I'm going to dip below $1000 in my savings. I do have other savings, but they are meant for the long term and I really don't want to dip into that. The logical part of my brain is telling me I'll be okay, and I should be able to build up my savings in a few months to a more comfortable level. I know I should have several months of living costs saved up, but usually I have just about one month liquid. Although I did apply for a line of credit as backup, I don't plan on having to use it. I also happened to get a Christmas cheque from my mom, which makes me feel better, and I do keep track of most of my expenses so I will most likely be fine, but its the behaviour of stressing then buying extra stuff (or eating out or buying drinks) that I don't like and I'm trying to change. I'm going to do a review of all my expenses and figure out a strategy so I don't get caught off guard again.

Playing with Fire UK

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Re: Scarcity mindset
« Reply #14 on: December 05, 2016, 02:08:11 PM »
I know I should have several months of living costs saved up, but usually I have just about one month liquid.

This is really a judgement call, the amount that one person 'should' have is different to another. It sounds like maybe you will make better decisions knowing you won't run out of money.

Ann

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Re: Scarcity mindset
« Reply #15 on: December 05, 2016, 03:01:41 PM »
... it still hurts to see my planned spending fund depleted. I can still pay for everything and I don't have any debt, it just means I have a little less money in the bank.

My own answer to that "sting" was to set up a Capital One 360 account (back when it was ING Direct) and create a savings account named "Infrequent Expenses".  I automatically transfer a certain dollar amount every month.  Then, when I have those expected-yet-irregular-or-infrequent expenses, I transfer the cost of the item back into may checking account.  I track my net worth monthly, but I do not include this account in net worth.  That will drive net worth purists crazy, I know, but in my mind that money is already "spent."  I had been tracking my spending for two years or so before I did this, so determining how much to set up for automatic savings was easy.   I totaled up all those irregular expenses in one year, added a buffer, and divided by twelve.  Ta da! 

It's totally a mental cheat, but it gives me comfort.  I was tired of blowing my budget even if I worked hard with something I knew was coming.  And, yes, by "blowing" my budget I just mean saving less.

Metric Mouse

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Re: Scarcity mindset
« Reply #16 on: December 12, 2016, 06:32:06 AM »
... it still hurts to see my planned spending fund depleted. I can still pay for everything and I don't have any debt, it just means I have a little less money in the bank.

My own answer to that "sting" was to set up a Capital One 360 account (back when it was ING Direct) and create a savings account named "Infrequent Expenses".  I automatically transfer a certain dollar amount every month.  Then, when I have those expected-yet-irregular-or-infrequent expenses, I transfer the cost of the item back into may checking account.  I track my net worth monthly, but I do not include this account in net worth.  That will drive net worth purists crazy, I know, but in my mind that money is already "spent."  I had been tracking my spending for two years or so before I did this, so determining how much to set up for automatic savings was easy.   I totaled up all those irregular expenses in one year, added a buffer, and divided by twelve.  Ta da! 

It's totally a mental cheat, but it gives me comfort.  I was tired of blowing my budget even if I worked hard with something I knew was coming.  And, yes, by "blowing" my budget I just mean saving less.

I used to budget this way too. It seems like such a long time ago...

May I ask roughly how much you calculated you needed each month for these kinds of expenses?

Ann

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Re: Scarcity mindset
« Reply #17 on: December 12, 2016, 08:47:46 PM »
I transfer $140 per month.

Metric Mouse

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Re: Scarcity mindset
« Reply #18 on: December 13, 2016, 05:45:48 AM »
A fantastic number. Thank you.