A relatively new term, money dysmorphia is when someone’s perception of their finances doesn’t align with reality, such as feeling financially insecure even when they’re managing their money well. They may feel as if they can’t keep up with their peers when they are actually on a solid financial footing. Almost one in three (29%) of U.S. consumers reported this outlook in a December 2023 survey by Credit Karma.
Money dysmorphia can be problematic because having a distorted view of your financial standing can lead you to make unwise financial decisions. It can also exacerbate financial and overall anxiety. For this reason, it’s wise to become familiar with the symptoms of money dysmorphia, as well as how to deal with its impact.
Key Points
• Money dysmorphia is when someone has a distorted view of their financial status, which can lead to feelings of inadequacy and poor financial decisions.
• Personal experiences, such as growing up with limited resources or financial instability, can contribute to money dysmorphia.
• Symptoms may include overspending, underspending, financial decision paralysis, and stress about one’s financial situation.
• Social media and reality TV showcasing images of wealth can exacerbate feelings of financial insecurity and increase anxiety.
• Strategies to manage or overcome money dysmorphia may include limiting social media, seeking professional help, and developing healthy financial habits.
Defining Money Dysmorphia
Money dysmorphia is defined as perceiving your financial status to be different from and worse than reality. It borrows from the term “body dysmorphia,” a mental health condition in which a person has anxiety over perceived physical faults, when in reality those “faults” are minor or unrecognizable to others.
Money dysmorphia is often tied to a “keeping up with the Joneses” or FOMO (fear of missing out) viewpoint. For example, you might be earning a solid income, have a tidy sum in your bank account, and be paying down your student debt, but when you scroll through social media, your perception becomes skewed. You might see images of what looks to be the entire world, minus you, living it up on the French Riviera. By comparison, your life seems inadequate.
This is money dysmorphia in action. It hits younger generations especially hard, with 43% of Gen Zers and 41% of Millennials experiencing this issue.
Signs and Symptoms of Money Dysmorphia
How do you know if you are among the ranks of those with money dysmorphia? Here’s a look at some common signs of money dysmorphia.
• You tend to underspend. Money dysmorphia can make you feel poor in comparison to others — as if you’re barely getting by. You might adopt stringent measures to stop spending money and thereby build wealth. If you are avoiding many or all social events or swearing off vacations (including that favorite weekend getaway with your BFF), even while you have adequate spending money available, you could have money dysmorphia.
• You often overspend. The opposite behavior can also be true. Some with money dysmorphia may respond to feeling poor by overspending. For instance, if you see that many people your age on social media are shopping for status watches or handbags, you might drop a chunk of change on one to feel part of the (rich) club, even if that means you can’t put money in your retirement account for a while.
• You have trouble making financial decisions. Money dysmorphia can also paralyze you in terms of making financial decisions because your money status isn’t clear. Perhaps you’ve changed jobs and need to earmark a percentage of your earnings to go into a retirement account. With money dysmorphia, you may feel unable to know how much to save because you’re so unsure of your financial picture.
• You feel stressed or embarrassed about your financial situation. Money anxiety and stress, as well as feelings of inadequacy, can be a big part of money dysmorphia. If you feel as if everyone is doing better than you, financially speaking, and that you’ve failed to “make it,” even when you are objectively doing fine financially, that is a symptom.
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Causes and Contributing Factors
Here’s a closer look at which forces can conspire to trigger money dysmorphia.
Psychological Influences
There’s no doubt that the topic of money in and of itself can be stressful. In an April 2024 MarketWatch survey, 88% of respondents reported some degree of financial stress, and 65% (almost two out of three) said finances are their single biggest source of anxiety.
What’s more, focusing on which people have how much money can stir up many other emotions. Feelings of inadequacy, worries about one’s future, along with concerns about self-control and spending can all feed into money dysmorphia.
Social and Cultural Factors
Social media and reality TV can be a key driver of money dysmorphia by constantly showing curated images of luxury, abundance, and financial success. Constantly seeing this type of content can make you feel as if you’ve fallen short, despite the hard work you’ve put into your career and the successes you’ve achieved. Even just checking in on your friends and family through social media may make you feel that others have more and are living better lives than you are.
Personal Experiences
You might have experiences in your past that make you particularly vulnerable to money dysmorphia. Maybe you grew up in a family with limited resources, so now you feel compelled to show off your wealth. Or perhaps your family had money then lost it, and you went from feeling secure to feeling as if everyone was richer than you.
Experiences in adulthood can also feed into money dysmorphia. Maybe you started your own business and it failed or you got laid off from your first job. Even if you now have a steady income, those experiences could make you feel as if you are always struggling and everyone else is doing better than you financially, even when that’s not the case.
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Impact of Money Dysmorphia on Financial Behavior
As noted above, money dysmorphia can alter your financial behavior in significant ways. For some, it leads to excessive scrimping and saving due to a sense of feeling poor and wanting to hold as much money as possible. While this can produce positive behaviors (like opening a savings account to stash as much cash as possible), hoarding funds can also result in missing out on life’s pleasures.
Money dysmorphia can also trigger the opposite problem — spending more than you can afford in an effort to keep up with your peers or due to a constant fear of missing out. Blowing your savings on a status buy could make you feel rich in the short term, but make it impossible to stick to a budget and result in steep credit card debt.
Having a distorted view of your financial picture can also cause you to make poor financial decisions. For example, if you can’t tell if you’re doing okay or going broke, you might not feel you can contribute toward an emergency fund. Not socking away money in that kind of account could be a liability down the road.
Strategies for Managing and Overcoming Money Dysmorphia
If, as you read about money dysmorphia symptoms, you’re thinking, “That’s me!”, here’s advice to help you handle the situation.
Limiting Social Media
Taking a break from social media, reducing the time you spend online, or weeding out accounts that make you feel financially inadequate can help with money dysmorphia. You might adopt one of these habits for a specific period of time, such as two weeks, and then see if you even miss that content.
You might also make some changes in who you socialize with offline. If you have friends who spend lavishly, you can get sucked into a game of keeping up. You might decide to go out to dinner with big spenders only a few times a year and otherwise meet up with them for more wallet-friendly activities, like a free concert or walk in the park.
Seeking Professional Help
Working with a finance professional can be a good way to get clarity on your financial situation and potentially help you resolve money dysmorphia. You can get an unbiased opinion of how well you are budgeting, saving for the future, and managing debt, as well as tips on enhancing your efforts, if needed.
Alternatively, you might decide to see a therapist or psychologist to work on emotional issues related to money. Another option is to work with a financial therapist, who blends knowledge of personal finance and human behavior to work on overcoming money dysmorphia, achieving financial discipline, and other issues.
Developing Healthy Financial Habits
Honing your financial habits may also help you avoid or overcome money dysmorphia. A good start is having a budget that works for you. There are many budget techniques and tools to help you understand how much money you have coming in, where it goes, and how to balance your finances. A good budget can clearly spell out how much money you have available for discretionary spending (“fun” money). It may also help you realize just how well you are doing financially or allow you to see that your goals are within reach.
You can create a budget and track your spending with pen and paper, or you might download a budgeting and spending app to your phone to simplify the process.
The Takeaway
Money dysmorphia occurs when a person feels as if their financial situation is different from the reality. For example, if you are earning a steady income and saving for the future but see lots of millionaires living it up on social media, you might feel as if you are struggling financially in comparison. This can lead to issues such as overspending to keep up, being miserly in an effort to build wealth, or being unable to make financial decisions. Fortunately, a few smart strategies can help you manage or overcome money dysmorphia and find your financial footing.
Having the right banking partner can also help you track and grow your money and feel more confident about your finances.
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FAQ
How do I know if I have money dysmorphia?
Signs of money dysmorphia include overspending to “keep up with the Joneses” or economizing too much because you think you are financially unstable compared to others. You might also have anxiety and uncertainty about your financial standing, which can cause you to miss out on opportunities that would help you build wealth and secure your future.
Can money dysmorphia be treated?
Yes, money dysmorphia can be treated. You can work on adopting healthy money habits (which could include avoiding social media, a possible trigger for money dysmorphia) and/or seek help from a financial advisor or therapist to move past this issue.
What resources are available for those struggling with money dysmorphia?
If you are struggling with money dysmorphia, you might benefit from working with a financial planner to help you budget and save wisely. This process can also help you track your progress, which can be reassuring. Or you might work with a mental health professional or financial therapist to explore the emotional underpinnings of your money dysmorphia and develop coping strategies.
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