A ‘joy fund’ helped me overcome my scarcity mindset and start building wealth: Here’s how

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Here are my top tips for growing wealth without feeling deprived


My first job out of university was working at a bank, but from the start I didn’t feel confident about the money I was earning. I remember watching as every paycheck would disappear almost as soon as I got it, in order to cover student loan payments and make a dent in the $4,000 credit card debt I racked up during my last year at school.

This was definitely scary on a day-to-day level, but there was another emotional layer involved, because I was also constantly reminded of how I watched my immigrant parents work two jobs each to provide for our family, and still have very little left over. 

Over time, I came to understand that it wasn’t just standard money stress. There are even studies that have found that operating from a place of scarcity can have a substantial impact on how your brain functions. 

At a certain point, I realized that I was so focused on running away from this feeling of scarcity, and on money that I didn’t have, that I was making choices that were only putting a bandage on the problem.

Today, I have saved $150,000 in five years, built a diversified investing portfolio, and started a money coaching side hustle that became my full-time job.

Here are the three steps I took to I break out of my paycheck to paycheck cycle to start really growing my wealth. 

I changed my mental approach to money

One of the key things that helped me change my money approach was learning about something called the bandwidth tax. It was a concept I was introduced to in my final semester of my economics degree, but had forgotten about until I was in the real world, feeling restricted with my money. Essentially, when you are frustrated and overwhelmed by the process of having to make ends meet, your cognitive abilities to make rational money decisions can suffer as a result.

Using the majority of my paycheck to pay my debt meant I was left with very little discretionary income. I would get so fed up with having nothing to show for my work in my bank account, and that I couldn’t do even small things like go out with my friends for dinner or buy myself makeup, let alone save for something more substantial. 

But rather than reframe my budget, or do something to materially change my situation, I would get frustrated, spend money on things I didn’t need, and rack up more credit card debt. For me, having the choice to say yes or no was the most important thing. If I felt like I didn’t have a choice, that’s when my scarcity mindset was triggered.

Even though I knew I technically couldn’t afford to buy that random Amazon haul or UberEats sushi, everything else felt so restricted, and I felt like I couldn’t resist. But then any momentary relief would give way to guilt and shame once I saw my credit card bill, and the cycle would begin anew.

What I know now is that because I was focusing all my mental energy, not to mention the majority of my paycheck on my debt, my ability to rationally take a step back and say no to things like impulse purchases was weakened, because I was already stretched to my cognitive limit. But understanding this helped me find a way forward. 

I prioritized putting my savings first

Initially, I was so focused on paying off debt first because it meant I wouldn’t be paying as much interest over time. But as well-intentioned as that was, I was still racking up more debt anyway because I felt so restricted with how I could use my paychecks. 

It was when I couldn’t go on a trip with my girlfriends who all had graduated school and worked full time, that I knew I had to change my focus. Instead of throwing my entire paycheck onto my debt, I started sending a portion to a separate, high yield savings account first, before doing anything else with it. At the time, I didn’t have a specific purpose for the savings that I do now, such as an emergency fund. I just knew I needed to save. 

Seeing money left over in my bank account for six months consistently, gave me breathing room that I needed to feel that I wasn’t always stuck in survival mode.

The first time I felt like I wasn’t living paycheck to paycheck any more was not what I thought it would be. I had a dental emergency and my work benefits weren’t enough to cover it. But I had enough saved that I could make up the rest without having to resort to using my credit card, and still had a good amount left over in my bank account. 

While not an ideal situation, being able to pull from existing funds to help solve this problem helped me continue to boost my confidence about my money. 

I created a ‘joy fund’ to allow myself to splurge guilt-free

A coffee run, an order from Sephora, or brunch with my girlfriends were a few of the small pockets of joyful spending I felt deprived of while I was being restrictive with my finances. These were purchases that I valued, and I knew that in order to stay out of the cycle of impulse spending and racking up more debt, I needed a budget that allowed me to spend guilt free. 

Now that I felt like I was on more solid financial ground, I created a separate checking account and labeled it my “joy fund,” and I would move over $100 per paycheck. Since I already moved money to my savings, paid off debt and other bills, I knew that this $100 from my paycheck was allocated for and I could spend it however I liked. 

Giving myself an allowance like this, eased the scarcity mindset. I was now able to make an intentional spending decision to buy that coffee, to go to brunch or anything other joyful purchase without feeling like I couldn’t afford to. 

I felt like I was failing in my early twenties because I kept making impulse purchases and increasing my debt, but when I look back now it’s very clear that I was struggling with deeper psychological factors that made it difficult for me to get ahead. 

My experience informs a lot of the work I do today as a millennial money coach with my company the Wealthy Wolfe. I think it’s so important to hold space and provide safe spaces to talk about these issues without judgment, because that is how we break the cycles of stress and shame to be able to financially thrive. 

Parween Mander is a Millennial Money Coach, a Trauma of Money Facilitator, and the founder of the Wealthy Wolfe, a digital financial coaching and education platform for women of color from immigrant upbringings specifically.

The article “How a ‘joy fund’ helped me overcome my scarcity mindset and start building wealth for my future” was originally published on Grow (CNBC + Acorns).



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