"Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."
~Maimonides
The scarcity mindset is all around us in modern financial planning. From paying down debt to saving for retirement, the scarcity mindset asks the question "How much am I willing to sacrifice, both now and in the future?" The abundance mindset is completely different. Instead of focusing on sacrifice, the abundantly-minded individual believes and achieves.
Imagine the following scenario: you have $10,000 of high interest credit card debt that you desperately want to pay off. How would you approach this situation? For 80% of us, it would be a problem indeed—since 4 out of 5 Americans are living paycheck to paycheck. One solution is to seek out areas from which to save money, like cutting coupons or cutting out Netflix. This idea is known as "living within your means", and implies limited income and limited lifestyle. Another solution is working extra hours or getting another part-time job on the side, for example. (You could apply both methods and attack the debt even more rapidly.)
While the first method is certainly doable, it's clear that it focuses on solving the problem from a scarcity mindset. The second method leans more toward an abundance mindset, but notice that as income is increased, time is reduced--so we're still dealing with scarcity!
Another option is to expand our means. Since time is limited, we can only expand our means so far when trading time for money. We need to work smarter, not harder. Unfortunately, few financial advisers ever help us work smarter. In fact, the entire "nest egg" approach is built upon the ideas of scarcity and limited lifestyle. This "Retirement Calculator", for example, has the phrase "You may need to save more" right at the very top! That says to me, "You may need to reduce your lifestyle more."
Don't get me wrong. I'm not advocating spending frivolously, especially when our means don't support it. First, we should learn to live within our means, so that we can prosper as we expand our means. Otherwise, we fall victim to Parkinson's Law—an economic truth that says expenses rise to meet income—and we never get ahead. For this reason, budgets are excellent tools to help understand and improve our financial situation when beginning our journey to financial freedom. However, if we never learn to expand our means with an abundance mindset, budgets can become bondage. Instead of working smarter, we continue to work harder and harder. The difference between a fortress and a prison is which side of the lock you're on.
We're here to help you work smarter and make your money work harder. Our free beginner's course at www.lifestylebanking.com will open your eyes to the abundance mindset. What are you waiting for? Discover the freedom and peace of mind you deserve by living abundantly!
Learn more at www.livingwealth.com.
The information presented here is solely for informational and educational purposes. Dan Watkins is not a registered financial adviser. He can be reached at: danwatkins@livingwealth.com.