How to escape the cycle of scarcity : 5 steps exit strategy

Welcome if you are new to my blog. I have been getting few emails in regards to “how to escape the cycle of scarcity and move into abundance”. On this post I will share 5 strategic steps and tips to help you move past this problem. Let me begin by explaining the meaning of “Cycle of Scarcity” most commonly referred to as the “Rat race” 

Escaping the Cycle of Scarcity

What is cycle of scarcity?

This simply refers to a situation, when you are constantly broke, you have a scarcity mindset, unable/unwilling to invest in personal development /growth, living paycheck to paycheck.

Why this is happening? In my opinion, if you are an adult and find yourself revolving around this vicious cycle. Two key things can be deduced from your situation. You fall into one of these two categories

  1. No Income – You are not making money at all – (Category #1 )
  2. Lack of strategic long-term financial planning – You do not understand full how to manage your finances, or maybe “you do not understand the importance of having a long-term financial plan”  – (Category #2)

How to break the Cycle of Scarcity

To break the cycle of scarcity you need to reverse engineer the effects of the cycle

  1. You need a find a way to generate income (Step 1)
  2. Plan your finances strategically with long term focus (Step 2)
  3. Invest in your self-development / growth (Step 3)
  4. Change your scarcity mindset (Step 4)
  5. Wealth creation (Step 5)

Category # 1 - You are not making money at all

For people in this category you have to start from Step 1.  It is understandable if you are unwell physically or mentally. Besides that you should be able to address this problem. Generating income is an essential requirement.

There must be something that you can offer. Skills you could leverage for money. Have you considered freelancing or getting a stop gap job in the interim? Please read my article below to discover viable freelance platforms.

Category # 2 - You do not understand fully how to manage your money

People in this category have some sort of income (cashflow)  but are still struggling. This is due to the money you are making is not enough, at par or below your expenses; resulting in a viscous “cycle of scarcity”.  It is essential to manage your lifestyle and expenses strategically. Here are some guidelines to help you structure your income and expenses.

  • #1 – Do not spend more than 55% of your income on your necessities (food, shelter and clothing) – if your spending above this mark. You should  consider restructuring your lifestyle
  • #2 – Allocate 10% of your earnings towards long-term savings
  • #3 – 10% should be allocated towards your life emergency funding (Rainy Day Savings)
  • #4 – Invest 10% towards your self-development/ growth
  • #5 – Use 10% for fun activities – Treat yourself and re-charge
  • #6 – Use 5 % towards charitable deeds. Help others less fortunate than you. This helps you create an abundance mindset.
Skate Strategically to Abundance

Categories #1 & 2

Apply these financial lifestyle tips exactly as structured or tweak as required, to suit your specific needs. These six tips will help you address your cycle of scarcity problem. Acquiring knowledge through your self-development would empower you to create wealth in a sustainable way. Enabling your progression into abundance.

I know some people will not find this approach ideal, but it is reasonable and sustainable. Let’s face facts, whatever you have been doing thus far is not working. You need a new strategy. Repeating ineffective actions is a foolish act.

The definition of insanity is doing the same thing over and over again and expecting a different result”  (Misattributed to Einstein in the comprehensive reference “The Ultimate Quotable Einstein” from Princeton University Press – Source : https://quoteinvestigator.com)

Change is necessary at this stage to help you make the desired transition. Let’s assume that you currently have $0. If you got an interim job or freelancing gig that pays $1000 per month. Applying the strategy above over 5 months you will have $500.  Let’s say you could sacrifice fun (10%). That will pump you up to an astonishing $1000 within the same time-frame.  You can then use this saved up funds to kick start your wealth creation venture whilst still maintaining your income. This strategy would make life so much easier for you.

Why starting a business as an escape strategy is a tough proposition

 Some people dive into creating a business with a scarcity mindset. This is  very challenging because the prime agenda of the individual is not value creation. The focus objective is to escape the vicious “cycle of scarcity”.

Creating a business as an escape vehicle is a feasible concept but most people approach this idea without quite realising the constraints they are facing. I am not saying that this is an impossible task. However, it is a very difficult challenge. You will have to continuously fight against your basic instincts. Having a scarcity mindset would continuously push you to seek instant gratification rather than focusing on long-term goals. Your resilience will be tested.  The continuously mindset push for short term self preservation is draining and could lead to bad decision making.

Tina Rosenberg’s article “Escaping the Cycle of Scarcity” published in Opinionator (nytimes.com, 2013) referenced Sendhil Mullainathan, a Harvard economist, and Eldar Shafir, a psychologist at Princeton. Tina’s article reads “According to these authors, one explanation for bad decisions is scarcity — not of money, but of what the authors call bandwidth: the portion of our mental capacity that we can employ to make decisions”.

Scarcity fire

The impact of a scarcity / situational or circumstantial mindset on an entrepreneur

This scarcity induced mindset is like a flame that inhibits your creativity and ability to focus on long-term goals. It drives you to instant gratification as you seek to escape the flames. This presents a difficult challenge for an entrepreneur running a business. Did you just ask, what is the root cause of this dilemma? 

Lets review the situation and key constraint (Finance). Our natural basic instinct is self preservation. This instinct becomes overly activated due to the cycle of scarcity. The key culprit behind this mindset is scarcity ( lack of money $, £ etc). Inadequate capital means that you have limited or no resources to preserve yourself and drive your business.  It results to the following:

1. Skewed/Misplaced prime objective

Your prime objective is to make money and not to create value for others due to your situational mindset. As an entrepreneur, you start chasing instant gratification rather than value creation. Most people fall into this trap.

2. Focusing on short term rather than long-term

Due to scarcity you will always think short- term rather than long-term.  Again, this is because of your circumstantial mindset. For you it is all about survival and self-preservation. This is your natural built in defense mechanism. This basic instinct is hard to override and will lead to wrong decision making. 

3. Driven by scarcity not passion

The logic here is the same as in 1 & 2 discussed above. You are seeking an escape route through your venture rather than enjoying the process. You are constantly on edge with stress.

Heroes

Conclusion

  • Avoid this problem – This is my advise to anyone that has not yet embarked on a business venture as an escape strategy. I recommend that you apply the strategies in this post to avoid the problem. Hopefully, you will make the transition without going through unnecessary stress. 
  • Get help from a business expert or friend – For someone that has already started a business venture as an escape strategy or currently running a business with the scarcity mindset. Firstly, I want to acknowledge your endeavour thus far because the road you are on is tough. My advice would be to find a friend or expert to help you review key business decisions. You are a hero. However, even heroes sometimes need a hand. I wish you all the best on your journey. 

I offer 1-2-1 mentoring over phone and Skype to help guide beginners and expedite your path to success. To learn more about my mentoring program. Please contact me using my contact form. Due to other commitments sometimes I am unable to offer this service. 

Recommended training platform:
1. Clickbank University (Digital/Affiliate  Marketing) 

To all the entrepreneurs out there having a tough time. Please believe me that your efforts will pay off. You are a superhero. I would like to share with you a song from one of my favourite bands. 

The Script - Superheroes

I hope you enjoyed this song and drew inspiration from it, like I do. Thanks for reading and participating, much appreciated. Enjoy the process. Live your passion. Be inspired, be free!

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About The Author

Anthony is a UK certified business strategist and consultant. An entrepreneurship mentor and ezine published writer.  He embraced entrepreneurship after experiencing an existential awakening. Anthony helps entrepreneurs, aspiring entrepreneurs and small business owners achieve success. You are invited to check out his services page and connect with him via the following social platforms:

Facebook   Linkedin    Instagram  Twitter  Webtalk

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This Post Has 42 Comments

  1. Interesting read….
    I like the way you break things down “Reverse engineering” to unlock the true problems and causes of scarcity.

    Goals are critical to the process. Most people do not set goals, or else they set them incorrectly. In order to turn a “Wish List” into a real goal, it requires a deadline. Then we break that goal down within the timeline to daily steps (Doable action), The key to achieving the goal is to perform the action daily… Do something every day to move that goal forward.

    Great article!
    Thanks for sharing it.

    1. Thanks for stopping by and sharing your insight John, much – appreciated. Breaking goals into doable actions and performing those actions is essential to success. However, the Scarcity mindset sometimes gets in the way. Please feel free to reach out anytime. I always enjoy insightful conversations with like minds. Have a great weekend

  2. I so needed to read this right now 😀 Like a slap on the face really (which I hope I wake up from this time 😀 ). Great article Anthony and good advice from John as well. I think it’s difficult to define the goals and the suitable necessary actions..and then actually doing them. But perhaps writing them down and talking them over with someone who has taken the road might be encouraging to anyone inside the cycle to be able to move forward.

    1. Hi Salma.

      The difficult task most times is not conquering the forces outside but those within us. Thanks for stopping by and sharing your thoughts, much – appreciated. Looking forward to your success. Best wishes

  3. Hello Anthony!

    This is some amazing information. I agree that there are people who forget the one main ingredient to a profitable business – value! You hit that head on!

    I love how you broke down money management in such an easy way to understand! When you have a plan for your goal, it makes it that much more attainable!

    Keep up the great work!

    1. Hi Delanee

      Thanks for stopping by and sharing your thoughts, much – appreciated. The key requirement for a sustainable business is value creation. The scarcity mindset hinders this realization pushing entrepreneurs to seek instant gratification. Having a friend or expert for guidance is a good way to avoid this pitfall. I wish you all the best in your endeavours.

  4. Hello Anthony,

    This post is filled with great value. I enjoyed reading it very much.

    Getting successful or not depends on your thought patterns, that’s perfectly right. It does not depend on how intelligent someone is and it doesn’t depend on having a starting capital or not. If we believe in ourselves and what we do, then everyone has the capability to succeed.

    Creating value – thinking Long-Term – working with Passion, that’s what I want to do. You’ve brought it exactly to the point.
    Thanks for a really inspiring article. Looking forward to reading more of your posts.

    Pernillla

    1. Hi Pernilla

      Thank you for stopping by and contributing to this conversation, much – appreciated. I agree that everyone has a shot notwithstanding their circumstances, although some more than others. The key is surrounding oneself with people that have the knowledge that we seek and learning from them. Glad to know that you are building your business within your passion, creating value and focusing long-term. Please feel free to reach out to me anytime should you need business guidance. Best wishes on all your endeavours. Hopefully see you again soon.

  5. Probably one of the hardest parts is focusing on getting the benefits from a business in the long term instead of short term.

    1. Hello Sindey – Having a longterm focus is challenging because of the pressure for instant gratification. Thanks for stopping by and contributing much appreciated

  6. This post was well written. For me to stop the circle of scarcity one just need an income. Lack of income works hand by hand with scarcity, have a good source of income and see scarcity dies instantly.

    1. Hello Kate – Glad you found my article informative. Generating some income is necessary to escape the scarcity cycle. Thanks for stopping by and sharing much appreciated

  7. I have been through this many times before I learned to manage my expenses. What I do is to focus on needs before wants and to never ever forget to save even a small amount.

    1. Hello Rizzee – Happy to see you here. Focusing on needs before wants is surely a good strategy. Thanks for stopping by and sharing your thoughts. Hope to see you soon.

  8. Having a scarcity mindset is one culprit that makes us poorer… Having a plan,following your passion and having a mentor in that field you want to dive into will make it easier for you to flourish in whatever business you venture into..
    I have gained a lot from this write up..tips I never for once consider..thanks a bunch for writing this great article

    1. Great to see you here Obalade – Scarcity mindset is a huge hindrance to wealth creation. This is why the fundamental shift has to initiate from a shift in mindset. Thanks for stopping by and sharing your thoughts much appreciated. It is always a pleasure engaging with you. Hope to see you soon

  9. This article will help many. For those who are struggling like me, these tips will help us a lot. Reading and reflecting in each paragraph is a must if you like to get out from your life now.

    1. Great to see you here Meldred – Glad you found my article helpful and informative. If you apply the knowledge within you will surely move past your present difficulties and start your journey towards wealth creation. Please feel free to reach out anytime.

  10. Thank you for this really as I’m living paychek to paycheck. I always spent almost everything that I earn to my school fund, though I am deducting a percentage for my savings.

    1. Hi Tahong – Happy to see you here. Glad you found my article helpful in your current situation. Living paycheck to paycheck is very frustrating. Hopefully, you can apply the knowledge within my content to help you start creating wealth and abundance.

  11. This post is definitely for me because it like I have been stuck in the scarcity cycle for too long. I need to start planning for long term financial break through.

    1. Hello Dan – Glad you found my content informative. Longterm focus and planning is the best way to escape the cycle of scarcity. Best wishes on your journey. Please feel free to reach out anytime.

  12. Very interesting article. I say interesting despite it having a pretty general premise because these are the things we tend to forget as our life goes on and becomes more complex. It reminds me of what truly matters for sure.

    1. Hello Scott – You are right. In the complexities of life, we sometimes lose sight of the simplicities that matter. Thanks for stopping by and sharing your thoughts much appreciated

  13. Very informative article. No one wants to be stuck in the ‘rat race’ stage forever. Anyone serious about improving their financial status should find this article very helpful.

    1. Hello Roy – Thanks for stopping by and sharing your thoughts much appreciated. Please feel free to reach out anytime

  14. Failing to invest in one’s personal development can lead to severe stagnation. We should always strive to better ourselves by learning new skills to become more marketable and productive.

    1. Hello Meg – You are absolutely right. Personal development is the key to success. Thanks for stopping by and contributing much appreciated

  15. Delving into starting a business, as you’ve very well put it, requires a very specific mindset and the right motivation. The wrong mindset can spell doom for the business before it even starts.

    1. Hello Patricia – Mindset is everything when it comes to entrepreneurial success. Thanks for stopping by and sharing your thoughts much appreciated

  16. Many entrepreneurs fall into the trap of chasing instant gratification instead of looking at the bigger picture for the long term. I have seen so many people fail because of this.

    1. Hello Oliver – The lure of instant gratification is a great challenge that entrepreneurs must overcome to achieve success. Thanks for sharing your thoughts much appreciated

  17. I think the best thing to do in order to start seeing a change in your financial well-being is a lifestyle change. It’s never easy but it is very much worth it in the long run.

    1. Hi Daphne – Yes a lifestyle change starting with a change in mindset is required. Thanks for sharing your thoughts much appreciated

  18. These financial management tips are super helpful for me. Though I have some income, I find it so hard to save. I’l apply your strategies and see where it takes me.

    1. Hello Grace – Glad you found my content informative and helpful. Applying the tips and strategies within will surely set you on a good path. Thanks for stopping by and sharing your thoughts much appreciated

  19. Managing my finances is where I keep on slipping. Its like its never enough, I need to apply the 10, 10, 10, rule and cub the wastages that I have.

    1. Hello Barak – Glad that you found my content helpful. Effective management of resources is fundamental in order to escape the cycle of scarcity. Best wishes on your journey. Please feel free to reach out anytime.

  20. It will require careful thinking and planning to get out of the viscious cycle of poverty. Its totally not a wish-wish game.

    1. Hello Janet – Hopefully you can apply the strategies within this text to help you escape the cycle of scarcity. Thanks for sharing your thoughts much appreciated

  21. Wow, I think you have been reading my mind this is what I really needed. It’s like you wrote this awesome article for my needs because am in #category 1 and really needed advice and now I have some Thanks.

    1. Hello Robert – Glad that you found my article informative and informative. Hopefully, the strategies within would help you navigate through the cycle of scarcity. Thanks for stopping by and sharing your thoughts much appreciated

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