Is ‘Money Dysmorphia’ Sabotaging Your Finances?

These days, catchy terms like “loud budgeting,” “slow shopping,” and “girl math” are used to describe various trends in personal finance. However, one of the more insidious issues affecting financial health is known as money dysmorphia.

What is Money Dysmorphia?

Money dysmorphia is a distorted view of one’s finances. Personal finance expert Danielle Desir Corbett describes it as perceiving your financial situation much differently from reality. This condition can stem from past financial trauma, societal pressures, economic crises, or childhood experiences.

According to a recent survey by Credit Karma, 29% of Americans experience money dysmorphia. Courtney Alev, a consumer financial advocate at Credit Karma, notes that this phenomenon is akin to trying to keep up with the Joneses, leading to feelings of inadequacy when one cannot.

The survey found money dysmorphia particularly prevalent among younger generations, with 43% of Gen Z and 41% of millennials reporting it, compared to 25% of Gen X and 14% of those aged 59 or above.

Dasha Kennedy, creator of The Broke Black Girl and a financial wellness board member at National Debt Relief, explains that although the term is new, the feelings it describes are not. Naming the issue helps people understand and address it better.

Signs of Money Dysmorphia

Personal finance expert Elizabeth Ayoola highlights that people with money dysmorphia often see their finances subjectively rather than objectively. They might believe they are doing better or worse financially than they are, leading to excessive saving or overspending.

Feelings of sadness, anxiety, stress, frustration, unworthiness, or overconfidence when friends achieve financial milestones are common. These emotions can lead to harmful financial behaviors, like overspending on a vacation.

Ayoola explains that individuals might live beyond their means or, conversely, not fully enjoy their financial security due to perceived inadequacies. Ultimately, money dysmorphia can prevent people from achieving their financial goals or enjoying their achievements.

Excessive saving due to money dysmorphia can result in missed investment opportunities, while fear of spending, even on necessities, and constant worry about finances are other signs. Obsessively checking bank balances, avoiding financial discussions, and comparing oneself to others are common behaviors.

For younger generations, the temptation to measure financial success against social media representations can exacerbate these issues, fostering a cycle of financial instability.

Dealing with Money Dysmorphia

To combat money dysmorphia, Alev suggests taking an honest look at your finances, setting clear goals, making a plan, and focusing on your own progress. Conduct a financial audit to identify potential savings, set up automatic savings transfers, and gradually increase your savings.

Seek realistic financial goals and educate yourself on personal finance. Consider professional guidance from a financial planner or therapist, or reach out to your support system.

Desir-Corbett recommends finding an accountability buddy, monitoring daily thoughts about money, avoiding triggers and distractions, and unfollowing social media accounts that stir financial insecurities. Engaging with personal finance podcasts or books can help fill knowledge gaps.

Ayoola advises assessing your finances objectively by evaluating income and expenses to understand your cash flow. Focus on personal achievements rather than comparing yourself to others, as everyone’s financial journey is unique.

Finally, Kennedy emphasizes the importance of self-compassion. Understand that it is okay to spend on necessities and things that bring joy. Financial caution is beneficial but should not lead to constant inaction. Recognize when financial worries become excessive and strive for balance.