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The Short Answer

Are You Caught in a Scarcity Trap?

Fixing an ingrained scarcity mindset requires more than extra money.

Do you ever feel like you have less than you need? This can mean insufficient money, time, food, social connections, or other essentials. All these circumstances are problematic: When we have too little food, we get "hangry"; when we have too few social connections, we get lonely; when we have too little time, we get stressed. And that usually prompts us to make decisions we may later regret. This behavior can then quickly snowball, where one bad decision made under pressure can set the stage for others. Researchers call this cycle the scarcity trap.

One might think that a financial “scarcity trap” only applies to those with obvious scarcity--such as people experiencing food or housing insecurity--but that’s not the case. There are numerous reasons that people may feel money is scarce beyond their income level: In fact, around 60% of Americans reported money-related issues as a significant source of stress in their lives. Also, more than half of U.S. households do not have enough emergency savings to cover regular household expenses for at least three months in the absence of income.

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