Have you ever been accused of having a poverty mindset? Or a poverty mentality? How did that make you feel? Not good, right? Did it get to that point where you wanted to ‘fake’ your way out of it? Maybe if you act rich, walk rich, and think rich, no one will know you were not rich. Or you will actually become rich? I am sure that also did not work. But what exactly is a poverty mindset? Is it that all poor people are born with a different mindset or is this something you develop as you grow in the cocoon of lack and poverty? If having a poverty mindset is such a bad thing, how do you leave it behind and reorient yourself towards a wealth mindset?
What is a poverty mindset/mentality?
People usually invoke the term ‘poverty mindset’ when you’re always looking for free things or trying to avoid spending at all costs. While this may be true, it does not summarise what it means to have a poverty mindset. Alan Weiss, PhD described the poverty mindset as ‘one that influences behaviors consistent with beliefs that money shouldn’t be spent, opportunities are limited, any risk at all is dangerous, any success is temporary and non-replicable, and generally remaining in the back of the pack is safest.’
Poverty mindset is living in scarcity and in fear that there will never be enough. It is living in fear that things will never work out, that even what you have now can be taken from you at any moment and that wealth is beyond your reach. It is holding on to the belief that some people are already born into wealth and the rest are doomed to suffer the woes of poverty for life.
This is closely linked to a scarcity mindset which displays itself in certain ways, like holding on to things you no longer need. Remember all those possessions your parents can’t seem to let go of even though they no longer need them? Yes, a scarcity mindset, which is borne from a poverty mentality, could be the cause of that.
Also, if you are always scared of taking financial risks or you always look for quick ways to ‘cash out’, that could be a poverty mindset right there.
Why is the poverty mindset so bad?
When people say ‘you are poor only because you choose to be’, that may not be so accurate but they have a point. When you have the mindset that you can never be rich, you will find yourself doing the same things that will keep you poor. You won’t be bold enough to take risks, so investments won’t be an option for you, even low-risk investments. That means you’ve shut the door on one big way of building wealth. Also, when you have a poverty mindset you realise that you shield yourself from wealthy people. You may even find yourself blaming wealthy people for your own poverty. This again is another reason why one may never get out of poverty.
Having a mindset that is fixated on poverty and scarcity precludes you from the opportunities that may present themselves as your get-out-of-poverty card. It also puts you in a state of hopelessness where you’ve made your peace with where you are already and you no longer strive to get out.
And perhaps the worst thing a poverty mindset can do to you is make you believe money is a scarce commodity. As Olabinjo Adeniran, the founder of Future Africa said in one of our interviews with him, ‘money is far more abundant than most people know or can grasp.’
The other side of a poverty mindset: the wealth/abundance mindset
Alan Weiss PhD describes a wealth or abundance mindset as “one that assures you that you are successful and can replicate that success, you have value and talents in strong demand, and you can handle most situations that come your way very successfully. (And those times you can’t, you’re resilient and bounce back quickly.)
Does it sound a lot like positive thinking? That’s because it is. A poverty mindset is all about negativity. It is about impossibilities and the things that can’t be. An abundance mindset on the other hand screams optimism and possibilities. It pushes one to do a lot and go for the wealthy life they desire because they believe, unlike those with a poverty mindset, that they can have it if they work for it.
Learn more about the optimist money personality type.
How to spot a poverty mindset
When you notice any of these traits in a person, there is a high chance that they are operating with the poverty mindset:
- They believe money will never be enough.
- They have a scarcity mindset and are always afraid to spend.
- They go for the cheapest option available even when they can afford better.
- They are always looking for quick ways to make money and shortcuts. E.g. Ponzi schemes, giveaways.
- They blame their financial condition on other people, especially those richer than them.
- They believe wealth is a result of luck and that people who have it got lucky.
- They are always afraid of taking risks of any kind, especially when it comes to investments.
- They wallow in pessimism and self-pity.
- They believe wealthy people waste money.
Making the switch from a poverty mindset to an abundance mindset
Here’s the thing: if you’re born into a poor family, you are most likely going to live life with a poverty mindset. It takes some effort and intentionality to snap out of it. While where you are born into is not your fault or responsibility, the mindset you choose to operate by is solely on you. And thankfully, there are many ways you can switch from a poverty mindset to an abundance mindset. Here are a few:
Get financial education
One of the things that can change your mindset is learning about how money works from a personal and global finance perspective. If you do, you will realise that a poverty mindset is usually sponsored by money myths. The belief that wealth is unachievable and that you’re bound to remain in the financial state you’re born into are all myths that getting the appropriate financial education will fix. You can begin your financial education here.
Surround yourself with friends who have a wealth mindset
The kind of people you interact with shapes your mindset more than you know. Everyday chitchats, interactions on Twitter, and Instagram stories are just a few out of the many ways these interactions can shape your view of life. If you are surrounded by people who have a poverty and scarcity mindset, you will also think like them. It will be difficult for you to think differently. This is why you need to meet and interact with new people who think differently. It can start from the people you follow on social media, the YouTube channels you are subscribed to, etc. Being intentional about the kind of people who are in your space will help reshape how you think about money.
Have a financial plan
This will help you stay grounded in your truth when things get hazy. The bitter truth is this: rethinking money and embracing a wealth and abundance mindset won’t be easy, especially if you are still struggling with financial stability. This is why you need a plan that will help you stand rooted in your abundance mindset while you build wealth.
Embrace positivity and possibility
A lot of the switch you need will happen in your mind. It’s called poverty ‘mindset’ for a reason. Though it reveals itself in actual real-life scenarios, it is largely abstract. Ideas, beliefs, thought systems. It’s time to leave pessimism behind and choose optimism. Let your words reflect a new thinking pattern. Instead of saying ‘I can never afford that.’ Say instead, ‘I can’t afford that yet.’ Stop looking at people who are doing better than you as your rivals or enemies. Delete the thought that wealthy people waste money on unnecessary things.
Know that you are the architect of your fortune. Is it true that there are systems in place that make financial stability harder? Yes, it is. There are things beyond your control. But focusing on those things will not get you anywhere. The right thing to do is to focus on what you can control and fix that. You will be surprised by how much is actually in your hands when you start taking responsibility for your financial future.
Focus on what you have
A poverty mindset is really about scarcity. Scarcity of money, jobs, opportunities. What this does is shift the focus from what you actually have to what you don’t have. This in turn makes you feel disadvantaged, as though life has been unfair to you and only you. Focusing on what you have fuels hope and optimism. It gives you the ‘if I can have this, then I can have other things I want’ mindset.
Your mindset drives how you think about money and what you do with it. An abundance mindset is not about spending more or mismanaging resources. It is about approaching money from an informed position.
When it comes to personal finance and wealth building, having a poverty mindset and approach to money is a sure way to stay stagnant for life. However, if you want to achieve your money goals and build wealth the right way, and you have recognised that you are operating with the poverty mindset, now is the time to work on it. Use the tips above to have a mindset shift and see life from a different perspective, the abundant perspective.