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Your financial decisions are shaped more by your mindset than by math or practical reasoning. According to author T. Harv Eker, your internal beliefs set your financial blueprint.
In personal finance, your money mindset is your core belief system, which defines how you save, how you spend and how you manage debt.
A scarcity mindset is a way of thinking in which individuals believe that resources, like money, are scarce, and they live in constant fear of not having enough.
Educator Stephen Covey defines scarcity as the zero-sum paradigm—the belief that if someone wins, you lose. In finance, this leads to fear of spending, avoiding risk and hoarding.
If you’re constantly anxious about money, avoid investment risks, believe that opportunities are rare, and envy others’ financial success, you probably have a scarcity mindset.
This is a perspective in which individuals believe that there are enough resources for everyone. It embraces optimism, generosity and gratitude.
T. Harv Eker says, “Rich people think both... poor people think either/or.” He believes that having an abundance mindset is an important part of achieving financial success.
If you invest in your growth, celebrate others’ success truly, seek multiple opportunities without stress and plan for the long term, signs say that you have an abundance mindset.
A study by Mullainathan & Shafir in Scarcity, Why Having Too Little Means So Much, reveals that a scarcity mindset reduces cognitive bandwidth and leads to poor decision making.
To cultivate an abundance mindset, start by practising gratitude. Shift from fear to potential and focus on opportunities instead of limitations.
Look at others’ success as a win-win situation and surround yourself with people who think the same way, people who would find joy when you achieve big things.
Abundance mindset is backed by experts and behavioural science, so build wealth by focusing on higher earnings than just saving mindlessly.
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