Planning Tales: Trapped In A Scarcity Mindset

“Planning Tales” will be an occasional feature where we look at real-life client circumstances that I have encountered over the years, and what those clients have to teach us about financial management. Names and some details are altered to protect privacy.

When I first got started in the financial services industry in the mid 1990s, I was working as a teller in a coastal city that had a very large population of retirees and seniors. Although it was a fairly large town, it didn’t take long to get to know the regular customers.

One in particular stands out very clearly to me. She was a very sweet lady who was quite regular in her habits. She came into the bank every Wednesday like clockwork, and the conversation always started the same way:

“Hello! My name is Florence, and I’m 89 years old. And let me give you some advice: DON’T GET OLD!”

Keep in mind, Florence had an unfortunate habit of forgetting her teeth on the mornings she attended the bank, so these conversations often had a certain ‘gummy charm’ to them. But every Wednesday morning, there was Florence. The exact same opening line every time.

Florence and Her Unique Situation

She was the loveliest of characters; spry for her age and still very sharp mentally. She had a walk of many blocks from her home to the bank, and it impressed me that she was probably getting more exercise than I did.

And with every visit, her request was always the same: update her bank book and withdraw $40 from her chequing account.

Her chequing account was where all her pension deposits went, and it was also where the payments to her retirement home came from. There really wasn’t much more to her financial life; pensions in, care home payments out, and not much else.

Were that the end of the story, Florence’s tale would have been entirely unremarkable. But what always surprised me was that Florence also had about $700,000 sitting in a savings account that was never touched. It just sat there, month in and month out, collecting interest. For the life of me I couldn’t figure out what this money was for.

Florence Had A Plan

So being young, and curious, I eventually summoned the courage to ask Florence about her circumstances. This is where I learned that her husband had died, and her children all lived in other provinces. She was alone, but content, and her care home looked after her well.

“But why,” I asked Florence, “do you come in every Wednesday and take $40 from your account?”

“Well,” she said, “$40 is my allowance. It’s what I give myself to spend every week. And when it’s gone, I have to wait until the following Wednesday to get more.”

Needless to say, this confounded me. “Why only $40 dollars?” I asked.

“Well,” said Florence, with surprise, “this is the only money I have in the world, and it has to last me the rest of my life!”

Florence represented one of the clearest and most pronounced examples of a scarcity mindset that I have ever seen. (More information on what a ‘scarcity mindset’ is can be found here.)

Florence And The Scarcity Mindset

So imagine this: it’s about 1996, and here we have an 89-year-old woman with $700,000 in the bank and she is so worried about spending it all that she limits herself to just $40 per week. And despite many conversations with the bank staff, no one could convince her that she was okay to let go of the purse strings even a little.

Thinking about it though, it’s easy to see why Florence might have been this way. She would have been born somewhere around 1907. She saw two world wars and the Great Depression. No doubt these events would have had a significant impact on her. The lessons of scarcity and conservation were likely built into the core of her very being. Her scarcity mindset was likely instilled at a young age and never left. Her early years would have shown her that the world is an uncertain place and you have to struggle to keep what you have.

Changing the scarcity mindset.

The Lesson For The Rest of Us

All of us develop beliefs that are often based on personal experiences. And those beliefs lead to behaviors that may work for us in the moment. They may apply to circumstances currently at play in our life, in our economy, or with our belief system.

But that doesn’t mean those beliefs and behaviors should be held onto forever, as though they are written in stone. What may be practical and functional in one set of circumstances, may become impractical, or even ridiculous, as time goes by and circumstances change.

Have the courage to always be challenging your assumptions, beliefs and behaviors. Don’t cling blindly onto long-held biases. Make sure that what your are doing today is appropriate for today.

Important Disclaimer: the information above is for general informational purposes only and does not in any way constitute an offer for the purchase or sale of any security and is not intended to be considered comprehensive or personalized financial or investment advice. assumes no responsibility for the use or application of this information. Always consult a tax, investment, or other appropriate professional before adopting any new financial strategies.

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