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A Scarcity Mindset Feasts on Generational Poverty

Generational Poverty because of scarcity mindset

As with assets and wealth, scarcity and poverty are also passed down through families. “Generational poverty” is a family’s learning of beliefs and behaviors rooted in poverty after only two generations.

At the same time, the idea of being poor is unattractive to anyone, especially to a child. However, without a feeling of hope, you believe you’re doomed if you’ve never seen your life trajectory change. It is because of this that this scarcity mindset feeds generational poverty.

Breaking Down Generational Poverty

What exactly is generational poverty? Well, poverty of this kind is deeply rooted in a parent’s (or guardian’s) relationship with their child. Often, it’s taught and learned unintentionally. In fact, according to the Center for Poverty and Inequality Research at UC Davis, one-third to one-half of children who are poor during their childhood will be impoverished as adults.

For families to survive, external financial and internal psychological factors must work together. Unfortunately, children become accustomed to the persistent scarcity mindset as their default way of life.

Comparatively, situational poverty is the result of suddenly losing one’s job, getting divorced, or losing one’s spouse or partner. We who experience situational poverty know deep down that, despite being devastating, our circumstances will pass. In turn, we remain optimistic.

People living in generational poverty do not have that option.

The link between generational poverty and a scarcity mindset

It is natural for children to pick up on their parents’ patterns, beliefs, and behaviors. Unfortunately, as a consequence of generational poverty, ineffective parenting practices may be passed down to the next generation. An example of this is putting little emphasis on education.

Let’s clear one thing up right now: poverty does not imply stupidity, so we should stop portraying it that way and putting that stigma on it. Several reasons can cause education to be neglected. For instance, a single mother may have to juggle three jobs in addition to making sure her children are fed and safe. In addition, as a result of unmet needs at home, children may miss school often.


The resources needed to ensure children receive an education can be lacking for some families living in poverty as computers, access to the internet, or not having a home.

Children are also affected by generational poverty by constantly pressing present-day needs. Affluent people enjoy the privilege of planning ahead and believe in the power of their scheduling and planning. Our future holds great potential, and we plan for it accordingly, whether it’s college, a vacation, or living a comfortable retirement.

In contrast, families living in poverty experience scarcity as a way of life. Because every day carries a risk of not enough, full attention is required. For example, today, there wasn’t enough food, childcare, or money to cover utility bills.

What’s the point of thinking about the future when you don’t have enough to meet basic needs tomorrow? There is no control in poverty, and everything seems like a threat to the safety of you and your family.

Children’s brain development is affected negatively by poverty on a cumulative basis. Additionally, this contributes to how they view themselves and what they are entitled to — and as an adult, that continues.

What is a Scarcity Mindset? Why Does it Attack Generations?

A scarcity mindset is a mental shift resulting from a perception of limited resources. We have a limited amount of bandwidth in our brains, so any attention we devote to one problem cannot be used to solve another.

There are some benefits to having a scarcity mindset, though. Once upon a time, it was an evolutionary advantage. In the early days of human civilization, when food and shelter were scarce, this mindset helped humans focus on acquiring the essentials. Even today, it can be beneficial. For example, this mindset may assist you in developing excellent prioritization skills.

Additionally, many people with a scarcity mindset develop a trade-off mindset. You will therefore be more aware of the fact that having one thing in your life, such as $100 for groceries, may mean that you cannot spend $100 on those shoes you’ve been lusting over. In order to feel safe — you plan and budget financially, and you understand and abide by this concept.

Despite this, escaping poverty is extremely difficult due to the scarcity mindset. Investing in the future is impossible if you don’t take care of your current needs. Furthermore, having limited funds and focusing on the short term makes planning ahead difficult. In other words, it is buying cheap shoes over and over again rather than investing in a pair of high-quality shoes that will last a lifetime.

While it may seem more convenient to buy food than pay your bills at the time, delaying those tasks ultimately ends up costing you more in the long run.

Poverty does not result from bad decisions made by people; it is caused by the fact that poverty inhibits people from making good decisions.

A Scarcity Mindset’s Impact on Your Life

To begin with, you teach your mind and yourself how to be poor. Then, instead of looking forward and pursuing what you want, you are too focused on maintaining what you have. If you’re afraid you might run out of money, you stay in your current situation.

Secondly, researchers found that thinking about a high car repair bill significantly impaired cognition in low-income participants in a 2017 study. Likewise, these researchers studied sugarcane farmers in India, who produce most of their income at one time. It doesn’t take long for the farmers to go from being poor to being relatively wealthy during harvest time. Despite controlling for stress and other factors, the farmers performed significantly worse on cognitive tests before the harvest when they were poor than after that harvest.

According to the researchers, poverty compromises cognitive function. This is equivalent to losing roughly 13 IQ points, which is equivalent to not getting enough sleep for a whole night.

But wait, there’s more

Additionally, it makes impulse control more difficult. ‌The part of the brain that controls your decision-making is also responsible for controlling your impulses. As your brain function is reduced by tunnel vision, you are more likely to give into impulses that you would not normally act upon.

But it’s not just the brain that’s affected by poverty and scarcity. We know that poverty is associated with poor health. In addition to heart disease, depression, and weight gain, chronic stress puts millions of Americans at an increased risk for several preventable illnesses.

Moreover, kids raised in poverty suffer the consequences all their lives. As a result of poverty, children may develop brain disorders that may lead to mental illnesses such as depression and substance abuse in their later years. In addition, it has been found that children from low-income families perform worse on standardized tests, are more likely to drop out of school, and have fewer prospects of attending college in the United States.

How to Tell If You Have a Scarcity Mindset

Are you stuck in a scarcity mindset? Check out the signs of poverty below and decide whether you could benefit from developing a more abundant mindset.

Everything seems permanent to you

Fixed mindsets and poverty mindsets have a lot in common. In my opinion, these two mentalities are inseparable. After all, an individual with a fixed mindset, such as a scarcity mindset, does not accept change. That’s the way things are. In the face of setbacks, you don’t change your way of thinking and keep returning to it.

It is important to remember that nothing is permanent. All things are temporary. Bad feelings and challenging situations will inevitably pass. Even though they might seem to last forever, they don’t.

It is common for you to say, “I am not able to get the money,” “I will go without,” or “I am not able to do this.”

You become what you think by what you say. You create negative thought patterns when you speak negatively. As you continue to say what you are saying, you begin to believe it. Therefore, you should choose your words carefully.

Consider saying more positive phrases, such as, “I can do this, and I have everything I need,” to yourself instead.

You overspend

Scarcity mindsets are commonly associated with people who do not spend. However, it can also be an indication that someone is overspending. When you are unfulfilled, you may spend to get instant gratification. Meanwhile, you avoid spending in other areas.

In order to balance these spending habits — budgeting is essential, and you must plan your budget and finances correctly. You may wish to seek the advice of a financial advisor. In addition, many federal and local government agencies can help you with this budgeting for free.

You rarely show generosity

When you have a poverty mindset, you may be inclined to be frugal and don’t want to spend any more money.

A generous person is one who is willing to give to others as well as to themselves. In other words, you must put yourself in a state of mind where you think you have more than enough. Ultimately, this allows you to be more generous to others and move away from the mindset that is holding you back.

What others have makes you jealous

There are few emotions worse than jealousy. There is no winner when you’re green with envy. Furthermore, jealousy tends to extinguish appreciation in almost all forms, which results in you focusing on what you lack even more. Because of this, psychologists and therapists often emphasize gratitude.

The practice of gratitude every day can help you start seeing the world from a new perspective. As a result, health and happiness can be improved.

Scarcity Mindset: Breaking Free of This Generational Poverty Issue

Take the first steps toward a full and abundant life by letting go of the scarcity mindset. While not easy, it is entirely possible.

Make an inventory of what you currently have

You may feel as though there isn’t enough pie to go around for everyone if you have a scarcity mindset. Since there’s enough for you, you feel like you’ll be stuck with crumbs. By taking inventory of the things you already have, you can begin to overcome a scarcity mindset.

To get started, write down everything you already have on a piece of paper. The following could be on your list:

  • A place to live
  • Food on the table
  • The kind of job that pays the bills
  • Having a loving family or partner
  • Great friends
  • A pet
  • Your health

The act of being grateful begins when you actively consider how much you already have. When you focus on gratitude, you can avoid thinking there’s never enough.

In addition, it can demonstrate how rich you already are. But, of course, money isn’t the only definition of wealth. After all, it is possible to be wealthy regarding your health, relationships, and career options.

Avoid a self-fulfilling prophecy

“A negative money mindset — that you’re no good with money, that you can’t hold onto money, that you’re stuck in the financial situation you’re in with no way out — these thoughts can be paralyzing,” said a financial coach and planner Maggie Klokkenga, CFP, CPA.

Often, these negative thoughts can keep you in a rut financially. “You may not be able to take action, such as asking for that next raise, because you are already telling yourself, ‘What’s the point? I’m just going to spend it all anyway,'” Klokkenga said.

Use positive words and phrases

Are you crystal clear about what you want? That’s great. Put it down in writing. From there, list positive phrases that reflect your goals and desires.

For example, use alternative statements, such as “I am abundantly wealthy” or “I recognize abundance and opportunity throughout my day.” Also, replace “I cannot” with “I can” when speaking out loud.

Make your life story your own, and do not let others write it for you. In a wealth mindset, there is no room for pity parties. Remember this, and make sure you check yourself accordingly. It is also a good idea to leave reminders in your office or home and read your list of phrases or affirmations daily.

Learn more about money and expand your horizons

A good financial education is never too late, whether you’re a teenager or a retiree looking to stretch your savings. Why? “Your financial stability will improve, and your ability to manage your money will improve,” explains Due founder and CEO John Rampton.

“At the same time, the purpose is not to become an expert in this field,” he adds. “No matter what, getting a grasp on personal finance topics such as tax deductions, investing, and retirement planning is essential.”

You may find the following suggestions helpful in increasing your financial knowledge:

  • Keep up with financial news by reading magazines, journals, and online articles.
  • A book can teach you how to manage your money.
  • Listen to podcasts on finance and money.
  • Don’t miss out on financial management tools, such as robo-advisors.
  • If you are interested in learning more about financial literacy, consider taking a course.
  • Plan your finances with the help of a professional.

Take a new look at wealth

To break the generational poverty cycle, you must also change your perception of wealth. Rather than viewing money as something you lack and fear, you’ll benefit from viewing it as something you welcome and expect.

You can help yourself with this by doing visualization exercises. By visualizing yourself manifesting money, you can feel confident, happy, and calm each day.

How does this exactly work? Instead of linking money with anxiety, jealousy, and insecurity, associate it with opportunity, growth, and well-being.

Get rid of unhealthy financial traditions

Traditions that are unhealthy pass from generation to generation. But, in order to break yours, you must be committed to it.

That sounds easier said than done. But here are some pointers to get the ball rolling.

  • You must make a decision. Are you satisfied with your financial situation? Is debt causing you stress? If so, commit to achieving financial independence today.
  • Replace your poor skills with new ones you learn from others.
  • Repeated practice leads to skill development. The repetition of poor financial skills led to poor financial skills. On the flip side, the repetition of excellent financial skills led to significant financial skills. As such, make sure you learn from the right people. Learning from someone with money is better than learning from someone who looks wealthy. Financial independence is far from the reach of most people.

Overall, you can change your financial future by changing your traditions.

Put an end to comparing

Teddy Roosevelt once said, “Comparison is the thief of joy.”

You do yourself a disservice when you compare yourself to someone else. Why? When you compare, you take away valuable time you could use to earn more money or get your finances in order. And more importantly, comparisons make you feel miserable.

The moment you start comparing, stop. Take a moment. Next, look at the parts that are making you angry. Do they have a better education, a job, or a more successful career? Allow that to inspire you instead of leading to existential dread.

In other words, you should run your own race. Put your focus on yourself. The only thing that matters is you and your well-being.

Spend time with successful and wealthy people

In the words of motivational speaker Jim Rohn: “You are the average of the five people you spend the most time with.” To put it another way, you are defined by the people you spend the most time with.

Take a closer look at your inner circle. Your friends are molding you into what you want to be.

“According to my Rich Habits research, in which I interviewed 177 self-made millionaires over five years, long before they became rich, the self-made rich made an intentional, conscious effort to only forge relationships with individuals they aspired to be: other rich and successful people,” says Thomas C. Corley.

Rearrange the timeline

“Instead of thinking, ‘I have no money,’ you should think, ‘I have no money…yet,'” suggests Paul Sundin, CPA and tax strategist at Estate CPA. “This makes you more optimistic about your situation and, therefore will encourage you to find ways to improve your income and earn more money.”

Put a plan in place

Planning is the key to achieving your goals. What are you trying to accomplish? Map out how you will get there, and write it down. Organize small goals under larger ones. Plan your actions, then get them on your calendar.

Last but not least, let go of things that no longer serve you. Get rid of all the things you don’t need and only keep the things you really want and need. You can learn that you don’t need money or stuff to be happy. It can also be very therapeutic.


1. What is a scarcity mindset?

Scarcity mindset is characterized by a persistent feeling of not having enough-whether it’s money, time, or connection. A scarcity mindset can cause you to stay stuck in scarcity because these beliefs make it hard to move forward.

For many people, scarcity is more than just a mindset. Having difficulty affording food, housing, and paying your bills is neither your fault nor a matter of changing your mindset.

Poverty is linked to behavioral and mental health problems due to brain changes caused by living in scarcity.

Changing your mindset to one of abundance won’t solve all of your problems immediately. But it will make it easier for you to cope with them and find solutions.

2. How do you recognize a scarcity mindset?

A scarcity mindset may have similar effects and feelings as depression, or other mental health problems-and scarcity can also contribute to mental health problems.

Scarcity mindsets can be identified by the following signs:

  • Feeling behind all the time
  • Overwhelmed by bills and other obligations
  • Overscheduling often
  • Accepting opportunities that aren’t right for you out of fear of missing out on another

3. What effect is scarcity having on America

“There’s a very large proportion of Americans who are concerned and struggling financially and therefore possibly lacking in bandwidth,” says Princeton University psychology and public affairs professor Eldar Shafir, Ph.D. “Each time new issues raise their ugly heads, we lose cognitive abilities elsewhere.”

“These findings may even suggest that after the 2008 financial crisis, America may have lost a lot of fluid intelligence,” he adds. “People are walking around so concerned with one element of their lives that they don’t have room for things on the periphery.”

4. How a scarcity mindset can keep you in generational poverty

“When you’re hungry, it’s hard to think of anything other than food; when you’re desperately poor, you constantly worry about making ends meet,” explains Sendhil Mullainathan, an economics professor at Harvard who has worked with Shafir. “Scarcity produces a kind of tunnel vision, and it explains why, when we’re in a hole, we often lose sight of long-term priorities and dig ourselves even deeper.”

5. Can you overcome a mindset of generational poverty?

Rather than merely a matter of lack of money, generational poverty is a “chronic, mind/body condition exacerbated by the negative, synergistic effects of multiple, adverse, economic risk factors.”

Researchers Gary Evans and Michelle Schamberg of Cornell University have also found that poverty is transmitted from one generation to the next because scarcity entails stress, which affects children’s brain development and ability to learn, leading to another generation living in poverty.

Therefore, poverty is not only caused by external factors but also by internal factors, such as mental and physical well-being. Many neuroscientists and neuropsychologists have examined alternative education methods and techniques for overcoming poverty-related barriers in this context.

One of the most important factors in breaking a mindset of poverty, especially in children, is hope, according to Jensen, in addition to implementing novel teaching methods, physical activity, stress management, and a supportive social climate. Jensen argues that despite being widely perceived as an intangible ideal, hope is capable of triggering change by influencing gene expression and changing the brain.

According to neuropsychologist Rick Hanson, the brain can be changed by focusing on positive experiences, then the positive (and not the negative experiences) become neural structures.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

CEO at Due
John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due.

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