The Fine Line Between Financial Discipline and Scarcity

Muriuki has been working for the past 5 years in the banking industry.  When he first got his job, he rented a servants quarter to be living in as many people do. That is understandably what he could afford at the time.  Muriuki has worked diligently over time and his efforts have been rewarded with quick progression.  He is now a credit manager at another bank now earning a six-figure income. Muriuki still lives in the same place.  He has observed how his colleagues in this industry have gotten entrapped with the easy credit and are living lifestyles way beyond their means.

They have the latest gadgets, new cars, trendy clothes and spend heaps on entertainment. Muriuki prides himself on being frugal and disciplined with his money.  He hardly spends money unnecessarily and believes in securing his future as early as possible. Now initially you may want to admire Muriuki’s resolve to remain so disciplined especially amongst peers who are obviously enjoying the fruits of their labour.  So did I. I got intrigued with him and had a deeper conversation. When he is not at work he is spending time alone or with people he thinks have the same value system as him i.e. people who are also not overspending.

When I probed further into how exactly he is securing his future – it is through saving. That is, he keeps his money in the bank or in very liquid risk free investments. He has considered various investments but always manages to find a reason not to do it.  According to him most people he meets who give him investment advice are “out to get him” and they are charging too much. One example he gave me for not buying an apartment was that it was much cheaper to construct.  He has had opportunity to attend various investment workshops but his excuse is that it is overpriced and he can get the same information online.  The only training programs he has attended are those that are paid for by his employer.

Muriuki, contrary to his personal beliefs is not frugal or disciplined with money. There is a thin line between that and what is commonly referred to as a scarcity mentality. Muriuki seems to have crossed over to the scarcity side.  His motive has become to not spend money, not that there is a clear bigger objective that he is working towards. He can afford to live elsewhere. It is OK to stay in the servants quarter but Muriuki seems to have left his mind there.  Had he had very clear and definite plans about why he has chosen to keep his expenses to an absolute minimum, he would not be guilty of operating from a scarcity mentality.  Muriuki is different from a person who has a plan.

Someone who can say they are living there because they have a specific plan with a specific time frame to achieve specific objectives.  Someone who can even tell you, that despite their conservative lifestyle, what their specific actions towards their plans have been. For example if they are investing, learning about other things and exposing themselves to different experiences. There are many people in different ways who live frugally but are crystal clear in what they are trying to achieve in doing so.  Muriuki just seems to be saving for the sake of saving i.e. having money in the bank to look at. This mentality is keeping him stuck and giving him a false sense of superiority over others who have made different decisions. He is not going to places where he interacts with people who can help him progress. He in fact thinks those courses or workshops are too expensive, when he can in fact afford them.  He is not actively pursuing investments that will put him on the path to this financial security.

Because his mind is stuck in the servant’s quarter he finds a reason not to do aggressive investments. Even though he says construction is cheaper than buying an apartment, he will probably never be brave enough to develop. If they are reasons not to buy an apartment there are probably more reasons not to develop. If he has retained his money in risk free investments, chances are he will never make a sudden leap and start constructing. He will find many of colleagues who did not live as frugally as him will probably end up wealthier than him.

Many people like Muriuki think financial planning is about stinginess.  It is not.  It is a process of allocating your resources – time, money, and networks in a way that helps you achieve bigger things.  There is nothing “bigger” about where Muriuki is going.  He may end up with a lot of cash but he will never grow.  Taking some of these steps like moving house may help you push yourself harder. Of course even this has to be done with consideration of what you can actually afford.

I am in no way advocating for overspending, living above your means, digging yourself into consumer debt etc. but we need to place ourselves in environments where we get to push ourselves harder.  We need to get out of our comfort zones.  This can be how we live, what we are investing in, who we are meeting, how we are spending time and how we are learning.  Muriuki is in a comfort zone with his current lifestyle. It is very easy to maintain especially given his income. Very easy to secure financially when you are already a manager in a bank. He does not really need to push himself harder.

The problem is he will never grow or achieve things that are out of the comfort zone of the servant’s quarter because he has latched on to it as part of his scarcity mentality. Eckhart Tolle expressed this scarcity mentality very well in one of his books “If the thought of lack has become a part of who you think you are, you will experience lack, all you will see is lack”.  No matter what situation you may be in, don’t choose to see lack. Choose growth.