A pessimistic and distorted view of one’s financial situation or well-being is known as money dysmorphia. Even if you are doing well for your age, if you have money dysmorphia, you may be preoccupied with money matters all the time.
The unhealthy comparison with others that is aided by social media sites such as Instagram, where everything seems wonderful, is a major cause of money dysmorphia. Individuals frequently hide the difficult aspects of their lives and only share the amazing ones, which might eventually cause psychological harm.
Additionally, reading too many personal finance websites, like this one, may cause you to develop money dysmorphia. Discussions about maxing out your 401(k) or only spending 1/10th of your gross income on a car may seem extreme, but that’s because Financial Samurai is entirely focused on assisting readers in achieving financial freedom sooner. You can begin to feel depressed about your financial condition if you’re not doing these things.
I’m sorry if this has upset you in any way. I’ve always thought that in order to get above-average outcomes, you have to push yourself beyond what is typical. However, making some readers feel awful along the road is one of the repercussions of challenging them.
To make things even, I’ve attempted to share the challenges I’ve faced with money. Real life is untidy. There are going to be obstacles in the path. It is my wish that we may grow from our mistakes and proceed.
Increasing Financial Dysmorphia: What to Do?
More than 600 adult Gen Zers were polled by Business Insider regarding the financial obligations that really stressed them out. Nearly half said they were worried about their ability to save money. Considering how much more expensive things has become over time, this worry is reasonable.
Many people put off establishing a family because of the significant financial burden of saving for housing and college. When the epidemic initially struck in March 2020, the national personal saving rate spiked to almost 30%, but it has since fallen down below 4%.
It appears that Americans’ inability to save more is a result of both their lack of discipline and growing expenditures. We can conserve more if we NEED to, as the pandemic has demonstrated.
Conserving Money and Money Dysmorphia
It’s odd that realizing how little the average American saves might make us feel inadequate! On the one hand, we may be pleased with our 15% savings, which is more than three times what the average American saves. However, when we learn that the average American savings rate increased to 32% in March 2020 and to 27% during the second wave of COVID in 2021, we may suffer from money dysmorphia.
Now, we may feel incapable of saving more than 30% of our income, despite the fact that this percentage is six times greater than the long-term national average. Money standards have risen over time, in line with the growth of beauty standards.
Your 15% savings rate would seem even more modest if you later read a post about how to retire early that suggests saving 50% of your after-tax income.
Compared to older generations, younger generations experience more money dysmorphia.
In a December 2023 Credit Karma survey, 41% of millennial respondents and 43% of Gen Z respondents said they had money dysmorphia. This contrasts with 14% of respondents who were 59 years of age or older and 25% of Gen Xers. Furthermore, roughly 45% of Gen Z and millennial respondents (or 44% and 46%, respectively) are fixated on the idea of getting wealthy.
Considering that younger generations have less life and financial experience, this makes reasonable. When you write about money or discuss money with someone who is older than you, you inherently compare higher. You may feel worse about your financial status if you make comparisons between your five years of saving and investing and someone else who has saved and invested for 25 years.
Though it seems like a relatively new phrase, I’m not sure survey takers truly comprehend what money dysmorphia is. We’re not simply talking about stressing over how you’re going to pay for your next credit card statement because you took an expensive vacation. Rather, money dysmorphia is more about oversimplifying your financial circumstances and living in constant fear of failing, even if you will probably get by.
Mid-20s to mid-30s folks typically go through greater life transitions; they may be preparing for a wedding, saving and investing for a down payment on a home, quitting their job to pursue an MBA, or starting a family. It makes sense to be concerned about money with all these significant life changes!
Financial Catastrophizing Examples
There are greater uncertainties in life while you’re young. Consequently, it’s simpler to become pessimistic about the future:
What if I’m forced to stay in my miserable, pointless work forever? What if, in my prime dating years, I am fired and wind up living in my mom’s basement? What if I become a wealthy, childless woman or gentleman without children? What happens if I invest $240,000 in an MBA program and upon graduation secure a job that pays the same as before? What happens if I’m never able to purchase a backyard single-family home? What happens if my emergency money is completely depleted due to a car breakdown?
What if my kids wind up flipping burgers at McDonald’s because they can’t get into a top 100 college? What if, after forgoing our retirement to send our children to a private elementary school, they graduate and gain admission to a public university with a higher than 70% acceptance rate? What happens if my partner takes all I’ve earned and files for divorce?
Given these daunting considerations, it’s understandable why some people have money dysmorphia! Undergoing significant life changes always encourages contemplation. Every decision you make has some risk and the potential for regret. The majority of these unfavorable outcomes won’t occur. But if you live long enough, you will encounter many obstacles.
Superb Illustration Of Money Dysmorphia
This dejected man, who is 25 years old and has a $1.4 million net worth, is voicing his worries about falling behind on the app Blind.
Ways to Get Past Your Money Dysmorphia
These are two strategies to help you get over your money dysmorphia.
1)Understand Your Finances Completely
When you don’t keep accurate track of your funds, it might lead to a distorted sense of your financial reality, which is known as money dysmorphia. If you don’t know how much money you have and how it’s invested, you can mistakenly believe that you are poorer or that your finances are more vulnerable than they actually are.
You have to keep close tabs on your money. It is less likely that you would suffer from money dysmorphia the better informed you are about your financial flow and overall net worth. Since 2012, I have personally been tracking my finances for free using Empower. I see an updated net worth value each time I log in. I may also view my credit card debt, mortgage balance, and all of my investments.
I was relieved to see that practically all of my financial transactions will be monitored and updated after connecting all of my accounts to Empower’s dashboard. When you go grocery shopping, it’s like switching from having a long mental grocery list to putting it all down on paper.
I was relieved to see that practically all of my financial transactions will be monitored and updated after connecting all of my accounts to Empower’s dashboard. When you go grocery shopping, it’s like switching from having a long mental grocery list to putting it all down on paper.
2) Transform unclear financial objectives into specific ones
Ambiguous aims breed uncertainty, which in turn breeds catastrophizing and, in the end, money dysmorphia—the persistent worry of running out of money.
You must set definite financial objectives with due dates. You should also create models for the worst-case, realistic, and best-case scenarios. Eliminate as many financial blind spots as you can.
An example of converting a vague objective into a precise financial objective
Every parent is aware that they ought to put money down for their child’s college expenses. But not every parent is aware of how much and how long to save. Most parents just know that college is expensive and that each year, tuition rises more quickly than the rate of inflation overall.
Parents worry that they may never be able to pay college comfortably because of this uncertainty. When parents believe they have failed their children and that community college is their only alternative, they may become catastrophizing. After that, they will spend the remainder of their lives working at McDonald’s.
On the other hand, parents can peruse articles such as “When to Stop Contributing to a 529 Plan,” which offers a guide for figuring out how much to contribute, when to stop, and how much future college expenses are expected to be. Once this college savings approach is implemented, the parent will know exactly how much to save for college, so there shouldn’t be any financial dysmorphia.
