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Avoid the Poverty Mentality

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nickels-and-dimes-and-poverty-mentality iStockphoto/Thinkstock

These are challenging times for many of us, and I’ve identified a way that we make it even worse for ourselves: the “Poverty Mentality.” A poverty mentality comes into play in two different ways. I will describe and then illustrate each of them.

This entire philosophy must be scaled to your particular situation. Some of us may agonize over 10 cents while others don’t give it a thought unless the amount is $20 or $50 or even more.

I don’t mean to be insensitive to really serious hardships that some of you may be facing. Maybe 10 cents here and there WILL make a difference for you and if so, I’m sorry you’re going through it and this article won’t apply to you. If you really think about it, though, I’m sure you can identify a threshold below which these ideas do apply.

The first way we do this to ourselves is when we agonize over nickels and dimes when, in the grand scheme of things, those nickels and dimes really have no negative effect on our situation.

Why is this a bad thing? It’s bad because it keeps us feeling deprived and feeling even more broke than we really are, and those feelings lead to depression and poor self-esteem.

Being frugal is one thing, making bad choices is another. I found myself depriving myself of a pack of gum because it was 75 cents.

Seventy-five cents?? I’m not going to lose my home over seventy-five cents, so why am I denying myself this small pleasure?

The other thing we do when we have a poverty mentality is we go out of our way to save money when the cost of doing so is much higher than the money we save.

Why is this a bad thing? It’s bad for the reasons above and also because we end up wasting money instead of saving it.

Classic example: Waiting in line for lower gas prices. I’ve seen gas stations that drop their prices by 50 cents a gallon just for the publicity. The result? Cars are lined up around the block (I’m not making this up) from as early as 5 a.m.!

Think about that for a minute. Let’s say you need 10 gallons, which means you’d save a total of $5 -- 50 cents times 10. That seems like it could be worthwhile, until you consider what it costs you to save that $5.

Add a Comment2 Comments

Awesome article Dave. I have a few clients with this kind of mentality. No matter how hard I try to get them out of their "negative comfort zone" they seem to go back to it.
One client of mine in particular is always depressed and anxious because she thinks she cannot afford anything. Yes, she has a pretty penny in her "savings account" but in the new world economy, that isn't getting her far. She won't invest, she tells everyone she is poor. Oh by the way she lives in a McMansion! By doing this people give her things and pay for her dinners, etc.
I find that it is a game she plays, maybe unaware of it, but what is the point when she is always miserable?
I like the point you bring up spending so much time researching on line to save 50 cents. That had me laughing out loud.
To me, time is money, and I rather purchase something that sounds reasonable to me rather than go for the "deal."
Don't get me wrong, I'm not a spend thrift, but I find being practical and buying what I need leads to a more peaceful life rather than my clients. I'm grateful for that and your article.

March 15, 2012 - 9:53am

Interesting timing of your article.  I just spent 30 minutes looking for the best deal on a new pair of running sneakers.  I know the exact model I'm going to purchase but couldn't decide if I pay more for the sneakers on one site and get free shipping or pay less on the  other but pay for shipping.  At the end of the day I'm going to spend just about the same amount of money no matter what I choose.  Thanks for the reminder.  There are definitely other things I could be spending my time on.  :) 

March 14, 2012 - 6:13pm
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