Scarcity Scares Us Sensible
Posted by Gail | Filed under Life Lessons, Money Management
You probably know that one of the basic laws of economics is that the more we have of something the less value that something has. It’s called the law of demand and supply. In the free market, when there’s plenty of something and/or demand is low, the price goes down because there’s more than people want to buy. When there is very little of something and/or demand is high, the price tends to trend in the opposite direction because there are more people scrambling for the resources, willing to bid up the price. And so we have manufacturers striving for the perfect balance to producing just enough to keep prices at a stable (or rising) place.
Every time we have a sense that something is going to become available only in limited supply, we rush like lemmings into the purchasing fray. Apple says it has just 10 iphones available and people line up around the block to make sure they get theirs. Ticketmaster says there are only 15 tickets available and people sit at their computers ready to pounce on the send key as soon as sales open. The Scarcity Ploy is regularly used to pull our chains and get us to react. Think of Christmas, the latest Rage Toy that nobody can find in the stores, and the conniptions we go through to finally get our hands on one. Like well-trained circus dogs, we leap through the rings of fire.
Is there any way to take the idea that Scarcity Scares Us and turn it into something productive? Maybe.
Think of how you manage your resources at home. If there’s little sugar in the sugar bowl, do you tip a little less into your morning coffee so you can still have your three cups before you head off to work? If your gas tank is headed toward empty, do you think carefully about where you’ll be driving and how many trips you can consolidate to get to the station before you get to empty?
Since there is never enough time or money to do everything we want to do or have everything we want to have, we make choices. We take a little less sugar in each cup of coffee to stretch it out, barely noticing the difference. We decide to lump a couple of trips into one to save on gas. We let Scarcity Scare Us Sensible.
The exact same principal applies to the people who choose to live on the jars. With a limited cash available in the jar, they become very careful about how they will spend the money because they’ve got to make… it… last.
And so, it turns out, it is the abundance we have created for ourselves that has turned us into wasteful fools. Is it our own success in producing more than we need that has diminished the VALUE of our resources. It is our lack of scarcity that has moved us from planning carefully to thoughtless consumption.
Here’s an experiment for you to try to see just how much impact scarcity has on you, and just how sensible you become with your money when you limit your resources.
- Decide how much you have available in your budget for a want you plan to satisfy: entertainment money, clothing money, food money (above the essentials). Write on a piece of paper the amount you have, and the purpose for that money.
- Now give half of that money to a cause or charity that you feel is deserving. Yes, give away half the money.
- Spend the remaining amount on some albeit cheaper version of what you were going to buy. In other words, you can’t simply NOT BUY ANYTHING until you have more money. You must find a way to satisfy the need or want on your list using only half the cash you started out with.
- Watch your thinking.
- Do you feel deprived? Is it a challenge? How carefully do you weigh your purchases when you have less money to work with? Are you more thoughtful about what you’re doing with your money?
I’ve done this experiment a couple of times, and learned some valuable lessons about how I think and prioritize. Do the experiment and lemme know how it turns out for you.
April 3, 2009 at 8:29 am
I agree with the scarcity principle. I think only very careful people save money by shopping megasize portions at stores like Costco.. I’ve heard of groups of moms going together and splitting up the items which makes sense. But mostly I think that if you have a kilo of something you simply use more. Not to mention all the extra junk people leave the stores with. I remember passing a Costco after getting off a flight having just lived in a very poor country for a year. I saw people pushing gigantic carts stuffed way past their heads with boxes and bags. It felt very sad. The people I’d lived among had very little, but they were creative and for the most part survived happily. I wish I could say the same for us..
April 3, 2009 at 9:42 am
scarcity…lord I’m having cabbage patch dolls and tickle me elmo flashbacks. Thank god neither my parents nor I succumbed to that but I can remember the panic and desperation.
The jars make you think. They force you to make choices. They force you to plan. You can visibly see that cash in the jar going down down down. It’s true. You do hang on to those dollars, hoarding them. It is a great feeling if you can get to the end of the week and you shake the jar and you hear more than air.
Do I feel deprived? yes but that is still the ‘poor me why do they have and I do not’ mentality and that won’t go away overnight. I wish I could take my kids to Disneyland for the first time before they are old enough to drink there with me
I wish we had a house bigger than a breadbox where family and friends could gather. Hopefully this too shall pass one day.
I am on Month 4 of the jars. I love it. Thank you Gail!
April 3, 2009 at 10:42 am
As usual you get me thinking… my husband and I are amazed at how little we spend now on just “stuff” that we really thought we needed before. It’s truly sad how much we all waste.. a friend had come over to see our kitchen that we had refaced and commented that we should get a new fridge and stove now that the kitchen looks more updated. The ones I have are probably 15 or so years old… but they still work well. She said that “black” appliances would go better. So I just said until these die out completely I won’t be getting a new set but it got me thinking about how many of us would just simply get rid of perfectly working appliances for the latest style.. so where would the old ones go? Once again into the garbage where the piles just keeping getting higher and higher.. I really think that frugality ties in with being enviromentally thoughtful. I slowly but surely am starting to feel less and less deprived. The brainwashing from the advertisers are definitely wearing off in this house and I’m never going back! That’s what got me into to debt in the first place… I no longer feel that I need to compare myself to anyone.. I’m greatful for all that I have already!
April 3, 2009 at 10:44 am
I remember attending university and having weeks where I only had $20 or $30 for groceries. Its funny, but I lived on that and ate healthy too. It was crazy how I didn’t need the cookies if I could buy fruit instead. I had to think about what was better for me both physically and financially. It was propbably the healthiest I’ve been (except pregnancy).
Now, my husband and I feel like we don’t need to be so strict with the money we make. I know this is not the case if we want to pay off all our debt and create an emergency fund.
I agree with Jolie that is hard to deal with a deprived mentality. As soon as I think about cutting back I feel like I need to spend. I hate the thought of what I had dealt with in school, but it wouldn’t be that bad. We can pay the bills and deal with variable expences easily, but we spend too.
BUT I have started to take the steps required to take care of the debt…I find cash disappears too quickly in our home and having the money in the bank I can allocate it too the bills. I have set budgets for groceries and focus on buying sales and stocking up our pantry instead of just purchasing what we will eat in a week. I saw my mother do this as I grew up. I remember a time when my father had waited 6 months to receive EI and we survived on my mother’s small income. Because of the stocked cupboard and freezer, she only spent $120 over the six months on groceries. I don’t remember ever feeling deprived as a child. I don’t know how she did it, but Christmas and birthdays were within those 6 months as well. I call her when I need money advise. We talk about this blog daily. Thank you Gail.
April 3, 2009 at 10:47 am
This really hit home for me. When we were married, we had a very large combined income and I wasted a lot of it buying the kids everything under the sun. They never used half of it. When I got divorced, that had to change and things got mighty scarce for awhile. I didn’t feel deprived but felt deprived that I couldn’t buy the things for my kids that I used to. They didn’t really care. Now I’m on my feet, making good money and am also on month 4 of the jars.
The biggest change I notice is even if it’s scarce, I may walk by it and want it, but I know right away I just can’t have it. By the time it’s next week and I have money for it, I don’t want it anymore. I find the jar mentality is great for combatting scarcity or the next best thing.
April 3, 2009 at 10:48 am
Well, I haven’t done this exact experiment, but I have been living on a budget and on cash for the last several months, and it has made a huge difference!! And I love it, I am watching debt dwindle by the week…
Also, I am a psych major and it is amazing to watch people react to so many different ploys out there. What’s fun is learning the techniques and using them to YOUR advantage, it gives me a rush, and I almost feel like I’m cheating by knowing what I’m doing to people.
Thanks again, Gail!
April 3, 2009 at 11:09 am
Just the other day it was brought up, how much is enough? It got me to thinking a lot about it. I grew up in a poverty stricken farming family there never seemed to be money for anything if it didn’t support the farming habit… lol! But we always managed to get by and I felt like I had enough of what I wanted as a kid.
Now I’m a professional and making more money than I could have ever dreamed of as a kid and it still doesn’t seems to be enough (perception wise). My husband is the stay at home parent so we are living on one income. If he were to be working too I’m sure we would percieve it be still not be quite enough.
Funny how that it is.
I went to Costco the other day with $60 and guess what I spent $58, if I had gone in with $400 I’m sure I would have spent it. The jars forces me to figure out that “that” is enough and for that I am grateful.
What a mind bender though going into Costco and only spending $60. Thank you Gail, I read your blog everyday and catch your shows when I can… thank you for making me think again. Its been 2 months on the jars and its been hard and wonderfull all at the same time!
April 3, 2009 at 11:54 am
In today’s society, we have a ” I gotta have it now!” mentality. Businesses and advertising are using that on us on a daily basis. I see commercials that shout Limited time offers, don’t pay for a year, etc. They make us feel that these items won’t be around for long and scare us into buying them and I totally agree with Gail, Scarcity Scares Us! The biggest hurdle for me, is trying not to buy into the hype. I don’t need fancy new furniture, shiny new car,or the latest technogadgets. It is very hard to break the “keeping up with the Jones’” mentality(who knows…the Jones’ might end up on Gails show one day! LOL) and since we have started living off the jars we are slowly becoming comfortable with having “enough”.
April 3, 2009 at 1:01 pm
Oh my gosh – the Cabbage Patch Kids scarcity of 1983! I was working as a senior sales clerk at Eaton’s in the linen department when my boss moved me into the toy department for the Christmas rush. From the first of October we started taking orders for the dolls with a promise of delivery by the first of November. They didn’t arrive and the phone never stopped ringing. Some parents actually stopped by every day to personally check the shelves and one even tried to hook me up to a lie detector. Just kidding. But she did make me swear on a bible. I can tell you that as the weeks passed I never experienced such verbal abuse in my life, even from my sister.
The hundreds of Patches arrived on Monday December 12th – a date I will never forget. I spent the whole day in the shipping and receiving department sorting them out and attaching the orders to the correct dolls and the next day I phoned all the parents. We were open every night until 10 so my boss decided that we should tell the parents to come in at 9:30 on Wednesday and that we would start processing them at that time. His way of trying to avoid a stampede. Funnily enough he took the night off.
Unfortunately the cart loads of dolls were sitting just inside the doors of the shipping department and at around 7 o’clock one employee went through the doors and did not make sure that they swung shut behind him. A shopper saw the dolls and ran in grabbing as many as she could. Someone saw her and before you knew it we were swarmed. Like a crazy bush telegraph the news that we had the Patches spread like wildfire throughout the shopping center.
People were yelling and grabbing and hanging on for dear life while others were trying to rip the dolls out of their arms. Two men actually started a shoving and hitting fight and one woman threw herself on top of a box that had fallen on to the floor in a flying tackle that would have done any football player proud. It all happened so fast that we, the staff, just stood by with our mouths open, completely mesmerized. I eventually shook myself awake and called for security. They finally got things under control until they told us not to ring through any payments and started trying to get the dolls back. They got pretty beat up until the store manager arrived. He took one look at the chaos and told us to start taking payments for the dolls. He could see by the fanatical look in the eyes of the parents that they were not leaving without the dolls.
At 9:30 the parents who had ordered the dolls way back in October started arriving. The store manager had them gathered together into the cafeteria and told them what had happened. Only one man laughed. The rest were furious.
I have never before or since experienced a mob mentality like this although I have seen similar things on the news when a food aid truck arrives in a war torn refugee camp and that I can understand. The incident of the dolls was both terrifying and hysterically funny. It was also kind of tragic that these parents were so desperate for such an ugly toy. Of course it wasn’t the toy, it was the fear of disappointing their children. We did manage to find some Patches before Christmas – enough to fill about a third of the orders (but not the specific dolls the parents had desired) and the store manager gave the parents who lost out a voucher to get the dolls for free in January when we were expecting the next shipment. In January and February we got so many dolls we ended up putting them on sale. I bought two for my god-daughters for Easter. They were happy enough but not as excited as I was expecting. Old news I guess. I should have stuck with a chocolate bunny. At least I always got a chunk of an ear.
April 3, 2009 at 3:33 pm
To Maureen. I worked at “Simpson’s” at the same time, in the Toy Department. The same thing happened there too. We never took orders though, it was always first come, first served. We kept them behind the cash and handed them out one by one and what you got is what you got. Ah the memories. But it does draw you in. Ever notice if you’re in a public place and there is a line up you figure must be for something good and cannot resits asking someone what’s the line up for?
April 3, 2009 at 3:45 pm
We recently had some cabling done on our house so we don’t trip over the darn computer cords running around the floor, to teenagers bedrooms.
The comment was made as the talk got around to HD televisions.
WOW i haven’t seen a TV like that one in someones house for ages.
Now the TV works fine I hadn’t thought it was that old having bought it like 5 years ago I suppose but I know TVs are huge now flat screen but also $2500 for the average one that is a decent brand that’s not going to pack up in 12 months.
So yes she may be OLD but she still works fine and she will do us fine for a while yet.
April 3, 2009 at 5:27 pm
I always feel so sad when I see a Tickleme Elmo at the thrift store, it’s just tragic the lengths us humans will go through for something as foolish as “stuff”.
The sugar analogy is great, I have done that with all sorts of things, most noticably with shampoo! When i first get it, I use big blobs and sometimes even wash twice, then as the bottle gets closer to the end, I carefully measure and apply JUST enough to get my hair clean. It’s the same shampoo, it’s the same hair, it’s just the feeling of scarcity that is the difference.
When in college and trying keep body and soul together on a squeaky-tight budget I was a penny pincher to the extreme, EVERYTHING had the scarcity scare attached to it. I had meal planning down to the maximum nutritional value per calorie per dollar figured out! Now that money is more regular (and plentiful) I hear myself thinking, hey what’s another $5? And it makes me a little disapointed in myself in some ways…. then again I sure have more fun than I did in those lean years!
April 3, 2009 at 8:34 pm
Maureen, that Cabbage Patch story is mind-blowing. Another reason why I think we should call Christmas what it is: The Festival of Greed and Excess!
Didi – I am right with you on frugal = green. I am hoping so deeply that this recession brings a bright side: an enforced frugality that takes some of the pressure off the planet. If we’re really lucky, we’ll also finally understand that stuff doesn’t = happiness.
Fingers crossed!
April 4, 2009 at 12:35 pm
To Maureen:
I was at the age for the cpk when they came out the 1st time. I didn’t want one. I thought they were ugly and they stunk. I still think that today. They don’t smell like babies.
Anyways, have a simillar story with the xbox360. Working for a US company at their online call centre. That day, the store below us had a fire, and the xboxes were to be released for sale at 2pm ET. Our site was closed because of the fire, but there were so many people calling in for the xboxes they crashed the phone system. Those who got the 1st batch seemed to have nothing but problems with the systems, so sometimes it pays to wait. Especially with Microsoft.
April 5, 2009 at 5:31 pm
I got a CPK for my second Christmas…I still have her and now my daughter plays with her…LOL!
I love that being frugal can also help one the be more environmentally friendly and healthy!
April 5, 2009 at 8:03 pm
Hi everyone,
I’m in Australia, so I’m wondering what is Costco?
April 6, 2009 at 9:08 am
Sarah, Costco is a warehouse based store, originated in the U.S. selling items, usually in bulk, at reduced prices. You pay a yearly membership fee to belong which hopefully is offset by offering lower prices. Check out Wikipedia for more information.