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Do you have a scarcity mindset when it comes to your money? Find out.. Image Credit: Gulf News

Today, fear of scarcity plays out differently. Due to rising prices worldwide and a volatile stock market, we've simply rolled one set of worries into another, continuing to assume key resources as scarce, whether that's true for us or not.

If the current situation has you avoiding any long-term planning or fearing spending any money, even on things you need, you're experiencing a scarcity mindset. This basically means you view your resources - like money - as limited. And when you're concerned about access to money, it's natural to want to grab onto whatever you can.

At times, this impulse is useful. "It helped humans survive back in the day when we faced existential threats from nature," said Courtney Cardin, co-founder of US-based financial wellness and investment platform Aura Finance,  that's currently in the private testing phase. "Everyone who's here had an ancestor who benefited from a scarcity mindset."

But when a scarcity mindset isn't rooted in a real need to avoid hungry lions or preserve a season's worth of food without refrigeration, it can work against you, persuading you to make financial choices that aren't actually in your best interest.

The emotional and financial effects of a scarcity mindset

Factors beyond your control can limit your access to the things you need and make it harder to achieve your financial goals.

"You can imagine it's not a very pleasant place to be, to be kind of on guard, thinking that you've got to keep everything that you have, that you're going to lose it in some way," said Susan Greenhalgh, an accredited financial counselor and founder of Mind Your Money LLC in the US. "That's kind of a vigilant standpoint, and that's a very difficult standpoint to enjoy life from."

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Factors beyond your control can limit your access to the things you need and make it harder to achieve your financial goals.

The ongoing stress can cause you to hold onto cash in a savings account because you're afraid to invest, potentially limiting your ability to grow your net worth over time. Or you could take the opposite approach, spending money like there's no tomorrow because you worry items you need will disappear from stores. When you're anxious about the short term, it's hard to plan a few years - or even months - ahead.

You may even make ineffective or risky moves to try to lock in some wins. "Every product you see out there is a potential solution for you," said George Blount, founder of nBalance Financial, a US-based financial therapy and wellness practice. "The lottery's going to look a lot better. Cryptocurrency is going to look a lot better." But cryptocurrency may or may not be a good fit for your overall financial picture, and only one lucky person won that big payout. Unless you're reading this from a lounge chair on your new superyacht, it probably wasn't you.

How to put your fear to work

Though anxiety feels awful, it can be a productive emotion that spurs you into action. Reading through some recent bank and credit card statements, for example, can give you a better sense of where your money goes each month and where you might be able to cut back on spending.

Setting up automatic money transfers into an emergency savings account can help you feel more confident that you'll be able to handle an unexpected expense. Or perhaps you update your resume because you're worried about layoffs at your company. Whether or not that ends up happening, you'll be prepared to job hunt at a moment's notice.

What's not productive is obsessively tracking stock prices, falling for get-rich-quick schemes or constantly monitoring the news. There's a lot of yelling, often by people who don't totally understand what's going on but have opinions about it anyway. Give yourself the time and space to determine what you truly need and value, so you can set appropriate money goals and make a plan if things don't go the way you hope they will.

"We've got to stop and get quiet and figure those things out," Greenhalgh added. "Once we do that, when we have our mind to our money connection, we can dampen the noise out there a little bit."