How a scarcity mindset can make or break women’s retirement

Author: Addie Morfoot

Source: Real Simple

Far too many women fear losing their job, their income, and their savings. It's a logical fear, but there is a way to stop feeling powerless about money and shift out of the scarcity mindset.

The phrase "Bag Lady Syndrome" was coined in the 1970s to describe a fear specific to women: That we'll somehow lose our jobs, our savings, and end up homeless. On one hand, it's extremely antiquated language; on the other, it's more relevant now than ever before. Even before COVID-19, an Allianz study reported that the percentage of women who felt financially secure dropped from 68 percent in 2016 to 62 percent in 2019. 

Since Covid-19 began, millions of people have filed for unemployment—many of whom were women. From February 2020 to February 2021, 2.4 million U.S. females quit the labor force according to National Women's Law Center analysis. So chances are that the percentage of women feeling financially secure these days has dropped far lower than that 62 percent. 

But pandemic or no pandemic, there is a way to stop feeling powerless when it comes to money and saving money. It's a process that doesn't require cash; it simply requires a shift in that scarcity mindset—an attitude adjustment that could determine your fate with retirement success. 

Understanding your mental relationship with money

When I was growing up, both of my parents worked full-time jobs, making enough between them to raise three children and send each of us to college. But monthly mortgage payments and credit card bills caused plenty of strife. "How are we going to pay for this?" my mom spat out more often than not. My parents managed to get by, but throughout my adolescence, and still to this day, my mother is positive that financial doom is on the horizon. 

Psychologists have a name for my mother's pervasive financial stress. They call it the "scarcity mentality." It's an irrational fear that affects women across the board. No matter how many dollars are in the bank—$200, $2,000, or even $2 million—people with a scarcity mentality constantly worry that it's never enough, and that there's never going to be enough. Unlike someone living in poverty whose very existence is under threat and money is indeed scarce, this monetary fear is not based on an immediate challenge—but instead on a future hypothetical dilemma. It's also based on a belief that more money is not a possibility because it's unattainable and/or undeserved.  

"People with the scarcity mindset think that whatever is in the bank is not enough and will never be," explains Barbara Huson (formerly Stanny), money coach and author of seven financial self-help books. "The way you know you have it is if you hear yourself saying, 'I wish I had more money, but…'"  

That "but" is flooded in doubt and fear. Fear of failure, loss, sustainability, achievement and/or the unknown. Those fears or beliefs often develop in childhood and lead to a "never enough" relationship with money, Huson explains. And it's generational: Like my mother, I too believe that my bank account is being held at knifepoint and financial doom is inevitable. Plus, the scarcity mindset has no economic boundaries. A UBS survey found that half of millionaires with  less than $5 million believe that they couldn't withstand a financial setback. 

"The scarcity mentality permeates our culture," says family wealth preservation consultant Dr. Joanne Stern. "People, especially wealthy people, often become identified with their money. That is who they are. I've had people say to me, 'If I didn't have my money, I wouldn't know who I am.' So the idea of losing it becomes terrifying."  

It's a terror that thrives in all economic brackets—because money, for many people, is wrapped up in a psychological bow. One that's tied tight. 

"How safe you feel about money doesn't necessarily correlate with how much money you have, because it's so dependent on emotions," explains psychoanalyst and family business consultant, Jeff Savlov.  

The good news is that there's a group of people out there who feel the complete opposite of my mother and me when it comes to money and saving it. These people feel like they will always land on their feet and have money when they need it—and not because they are rich. What they experience is called the "abundance mentality."

According to Huson, people who say to themselves, Oh, I wish I had more money. Hmmm… so what can I do? are abundancy thinkers. These people believe in their financial prowess. In other words, no matter what happens to an abundancy thinker's bank account, they have willed it to be OK—because they believe in their power to forge ahead.  

If you've been prepping for your own financial doomsday, don't worry. The abundant mindset can be learned. It won't be easy to let go of your long-held beliefs and concerns completely and join the other side, but once you understand why you're expecting your money well to dry up, it's possible to find peace and even comfort with the cash you have.  


The scarcity mentality is emotional and can stem from how you experienced money as a child. My parents weren't millionaires, but living in a town with throngs of them made my feelings towards money that much more complex. I associated money with power. Ability. Control. If only we could afford more, then my mom wouldn't be so worried about the bank account. While my want was superficial, it stemmed from a deep-seated feeling of powerlessness.  

"Poverty is subjective," says Brad Klontz, a psychologist and certified financial planner. "The degree to which we rank ourselves in terms of our financial well-being has nothing to do with the actual numbers. It has everything to do with where we stack up with the people around us." 

While recognizing your scarcity triggers won't solve your scarcity mindset, it's a necessary first step.  

"You have to make a choice to challenge your beliefs, put them into context, and realize that they are hurting you instead of helping you," says Klontz. "It's critical element. Otherwise we feel like our approach is reality."  

People with an abundance mentality have an inner sense of personal worth that doesn't get bogged down in failure. Instead, they focus on the road to success and believe in second chances as well as opportunities. To be an abundance thinker, you do not have to stem from wealth. 

"The abundance mentality is not about how much money you have, but what you believe you can achieve," Klontz explains. "What we say to ourselves becomes our reality. Markets go up and down, but one fact holds true: Your money script—the unconscious beliefs you hold about money—will determine your financial health."   

Huson says that the first thing to do after recognizing your negative unconscious beliefs about money is to set up a savings account or a retirement fund. 

"I don't care if it's $10 a month," says Huson. "Save automatically. Have money deducted from your paycheck or checking account into a savings account because at the end of the day wealth and abundance are a matter of habits." 

She also recommends making your savings account a bigger priority than the amount of your paycheque. 

"Fixating on earnings can be foolhardy," the author says. "I call it the Illusion of Affluence. I see it all the time with successful women. Their significant earnings give them the illusion, but not the security, of true abundance." 

At 31 years of age, I didn't feel in charge of my future. I had never saved a dime—because I felt that saving money was a luxury I couldn't afford. I figured that I'd just never retire. Then, a few months after giving birth to my first child, I met a financial advisor at a mommy-and-me class. The financial advisor informed me that my thinking was completely off and that the best thing I could do for my family and myself was to start a retirement fund, which I did—immediately. Each month, my husband and I automatically deposited $50 into a savings account. Ten years later, we still have the account. 

"Wealth and abundance is a matter of habits," Huson says. "Getting in that habit of saving is a step towards creating wealth and security."   

Ignorance isn't bliss when it comes to personal finances. In addition to saving for retirement, Huson says to talk and read about money in order to reframe your relationship with cash.  

"Financial independence has nothing to do with how much money you earn, but how much money you keep," Huson explains. "You achieve it by spending less than you have and saving more than you need. Wealth doesn't come from what you earn. Wealth comes from what you save. It also doesn't take a lot of time to create wealth—and it's certainly never too late to start." 

Despite having a retirement account, I still fear a catastrophe will happen and I will be in a financial bind. My inclination is to bury my head in the sand to avoid knowing exactly how much—or how little—is in the bank. But then I remind myself of my unconscious beliefs about money. I remind myself of all of those abundance thinkers out there. And I silently give myself permission to believe in my own personal worth. I will forge ahead, earn the money I deserve, save it, and envision my retirement. 


This article was written by Addie Morfoot from Real Simple and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to