A scarcity mindset, or believing you aren’t entitled to what you deserve can hold you back financially.”When you think the pie is already set, competing against the next guy to get a bigger piece of the pie seems pointless,” says Toby Johnston, CPA and CFP with Mohler, Nixon and Williams in San Francisco, Calif.
Read on as we point out the poorest money mindsets and how to drop them so you can get rich.
Someone stuck in this mindset may think they only have enough to make ends meet, says Johnston.
They're living day-to-day and not thinking of the future.
'They never get beyond thinking, 'Hey, if I made a little effort to cut back, I'd have something left over to invest,'' Johnston says.
Blowing your paycheck at the start of the month only to count down the days until you receive the next won't boost your net worth (total assets - debt).
Memorize this equation: Wealth equals earnings minus what you spend.
'I think people in general have a tendency to increase their standard of living as income increases,' says Johnston.
'But if we spend exactly in proportion with our income rising, then we'll still wind up with the status quo.'
Try not keeping up with the Kardashians and see how much you save.
Some Gen Yers are missing the boat on investing for retirement for fear of mucking it up.
But don't let fear rule your money decisions.
Taking risks, like investing, will stretch your dollars, plus any mistakes you make along the way will prepare you for life's unforeseen challenges.
'Some people might not take on risk because they have nothing to lose,' says Johnston.
Get a budget going so you're not in that boat.
In fact, one economist found that women with poor maths skills don't invest nearly as much as they should for retirement and are more likely to see their mortgages default.
Professionally, not picking up new skills can damage your career.
'A lot of people are not strategic about acquiring professional credentials, they just get whatever degree they can to graduate college,' Johnston says.
In the working world, entrepreneurs must be their own best advocate.
If you're not confident in your skillset, how can you convince prospective employers?
Also, not standing up for yourself can make you a prime target for predatory lenders, shady used car dealers and other unsavory characters.
Put up a fight and always follow-up on complaints to start taking charge of your finances. No one will do it for you.
The rich know there's more to the game than landing a fat check at the first and fifteenth of the month.
'It's what you're worth, not what you earn,' Johnston says. 'No matter how much money you're making, if you're spending it all, you're not increasing your wealth.'
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