The Scarcity Fallacy

March 14, 2023

By ldraper on March 14, 2023

At RMB, we are setup to work with affluent families that occupy a unique position of wealth and success relative to global norms. However, as I’ve learned, wealth does not protect you from some universal psychological baggage that has infected the modern world. The one I’d like to unpack today is what I call the “Scarcity Fallacy.”  

Let’s start with a story. Keep in mind the numbers in this story don’t matter at all, it’s the emotions and the response to those emotions that matter.

I met one particular family 10 years ago. They were well established within their careers, their children were thriving in school, and they said to me on our first meeting, “Trevor, our goal is to have $10,000,000. When we achieve that, we will be content and ready for retirement.” I am pleased to say through good savings and investment, they reached that mark about five years after our conversation.

In our next review, I heard the following. “Trevor, great job helping us get to $10,000,000 but we’ve thought a lot about it and while our lifestyle hasn’t changed, we’d feel much more comfortable retiring if we had $15,000,000.”

Four years later, we reached $15,000,000 and I was so excited for our upcoming review, as they had recently shared unhappiness in their jobs and an excitement around the next chapter of life in retirement. What do you think I heard?  

“Trevor, we are so thrilled to have $15,000,000 and although we aren’t loving our jobs anymore, we just had our first grandchild, and our lifestyle still hasn’t changed we just think we won’t be comfortable until we have $20,000,000.”

The shifting goal posts didn’t take me by surprise anymore and I was ready to help them unpack what had happened. They had gotten caught in the Scarcity Fallacy.  

The Scarcity Fallacy starts with an embedded and entirely natural fear of running out of resources – in this case, money. It’s an ancient fear rooted in our primitive need for food and water, and it has generally served us well over the past millennia. However, in the modern era, if left underexplored it will consume our lives and create unhealthy patterns of behavior. There is only one scarce resource, and that is time. The fallacy is that we treat money like it’s scarcer than time.1

This leads to squirreling away money (at the cost of time) that we might never use. Think about all the delayed gratification. For every dollar that you don’t use in this lifetime, you are leaving all that gratification on the table – gone forever.

So how do we escape from the Scarcity Fallacy? First, we need to identify the scarcity fallacy in our lives. Then we need to shift our mindset from scarcity to abundance.2

Challenge #1: Look deep and acknowledge your natural fear of running out of money. Consider whether this fear is driving your decisions around saving, spending, working etc.

Challenge #2: Contact your RMB advisor and run through your retirement projections. Understand the balance within the Confidence Zone and ensure you are not leaving too much unused.

I hope you don’t spend too much time caught up in the Scarcity Fallacy and that you live from a thoughtful abundance mindset. If you are struggling to make that transition with your monetary resources, our team would love to help you!



1 Don’t hear what I’m not saying… money is also a scarce resource, and for some a VERY scarce resource. However, it will never be as scarce as time given that money is actually infinite, and our time is, well, limited. Not only that, but we can, if certain assumptions hold, actually project and predict just how much money you will have in the future with reasonable accuracy. None of us knows how much time we have, hence time is a much more scarce resource than money.

2 These tips can apply to any area of life where you might experience the scarcity fallacy, i.e., energy, relationships, projects, etc. But I’m only qualified and experienced to coach you through your money issues.


The opinions and analyses expressed in this communication are based on RMB Capital Management, LLC's ("RMB Capital") research and professional experience are expressed as of the date of this presentation. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future performance, nor is it intended to speak to any future time periods. RMB Capital makes no warranty or representation, express or implied, nor does RMB Capital accept any liability, with respect to the information and data set forth herein, and RMB Capital specifically disclaims any duty to update any of the information and data contained in this presentation. The information and data in this presentation does not constitute legal, tax, accounting, investment, or other professional advice. Past performance is not indicative of future performance, and there is a risk of loss of all or part of your investment. This information is confidential and may not be reproduced or redistributed to any other party without the permission of RMB Capital. RMB Asset Management is a division of RMB Capital Management.

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