Though it’s not at all a book on finance, The 7 Habits of Highly Effective People by Stephen Covey speaks directly to some timeless principles that can absolutely make or break your journey to Financial Freedom.
One key concept the book introduces is the idea of the scarcity mindset or mentality: “Most people are deeply scripted in what I call the Scarcity Mentality. They see life as only having so much, as though there were only one pie out there. And if someone were to get a big piece of the pie, it would mean less for everybody else.”
Escaping the scarcity mentality
When you’re taking the long journey to Financial Freedom, you’re susceptible to the scarcity mindset. You think there’s only so much money, Freedom and happiness to go around. And clinging to that mindset can prompt you to make money decisions out of fear, worry that everyone else wants to take what you have and keep an unhealthy grip on your cash.
But freeing yourself of the scarcity mindset will revolutionize your journey in three critical areas.
1. Make clear-headed financial decisions
Once in a while, you may be forced to make some significant financial decisions under pressure. You’ve unexpectedly lost a job. You’re facing a serious illness. Or your home takes heavy damage from a disaster.
But, when you live with a scarcity mindset, stressful decisions around finances are the norm — not the exception. And the results can be disastrous.
Thinking you need to save every… single … penny can look like you spend hours clipping coupons and driving from store to store just to save a few dollars a month. Or, if you’re convinced there’s just one perfect house for you, you may throw yourself into a bidding war for a home you couldn’t even afford in the first place.
But, when you lose the scarcity mindset, you stop worrying that the grocery store or another person is primed to pounce and rip you off. Instead of having a single goal of accumulating, you can relax enough to assess your finances, define your goals and make a plan to get you there — no matter what everyone else is doing.
2. Pursue the right financial plan
When you’re ruled by a scarcity mindset, planning ahead and taking action may be the last thing on your mind.
Why spend to visit the doctor or maintain your car when everything is working … for now? Why build an Security Buffer or shell out for insurance when there’s no danger in sight? And why take a risk by investing when your money is perfectly safe under your mattress?
Attaining Financial Freedom doesn’t happen by accident or by sitting on your money. Freedom requires you to plan thoughtfully and use your money wisely. For example:
- Saving for an emergency prevents you from running to high-interest credit cards if the unexpected happens.
- Paying for insurance coverages protects your pocket from runaway expenses for health issues, property damage, liability and even death.
- Investing in low-risk, income-producing assets allows you to grow your money not only to beat inflation but to build a better future for yourself.
3. Embrace a supportive community
“People with a Scarcity Mentality,” writes Covey, “have a very difficult time sharing recognition and credit, power or profit — even with those who help in the production. They also have a hard time being genuinely happy for the success of other people.”
You are not alone on your journey to Freedom. And the people walking the path with you can be some of the greatest assets of all.
The MindShift.money community isn’t one of competition. We share our struggles, encourage each other through difficult decisions and rejoice in our friends’ successes. Freedom isn’t just for one person. It’s something that all of us can achieve.
In fact, the more of us who commit to the process, the more we’ll be positioned to share and model wise money decisions. And the greater benefit we’ll ultimately be — not just to ourselves, but also to the world.
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Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.