Money Dysmorphia and Millennials
It’s normal to feel some level of anxiety during periods of financial uncertainty. But for some people, financial anxiety is so prevalent, it’s become their normal state of being… even when they’re saving well, their portfolios are growing, and they’re gainfully employed.
Why the disconnect?
One explanation could be money dysmorphia: a skewed understanding and perception of one’s financial wellness rooted in anxiety and negative feelings. Let’s take a look at how and why money dysmorphia shows up for some people and review some tips for keeping it in check.
What Is Money Dysmorphia?
When someone experiences money dysmorphia, their money decisions are often impacted by their fight-or-flight state and can appear irrational. Usually, money dysmorphia causes people to believe that they will never have enough, even if their account balances are strong. In some cases, money dysmorphia causes the opposite: someone may chronically spend on impulse when they don’t have the funds to back it up.
Here are some examples of behaviors driven by money dysmorphia:
Hoarding money unnecessarily
Worrying about money in spite of responsible saving and spending
Checking account balances daily or even multiple times a day
Constantly comparing finances to others’
Experiencing intense guilt or shame after making purchases
Looking for ways to increase income (more than normal)
Making purchases that are totally unaffordable or unreasonable
Compulsively following luxury trends on social media
Avoiding making purchases altogether
According research from Acorns, 33% of Millennials report feelings consistent with money dysmorphia: namely, they say they “can't enjoy life because they obsess too much about money.” While some money concerns may be reasonable in a healthy situation, money dysmorphia causes individuals to take things to an entirely new level, often bordering on obsession. Money can become an all-consuming concern that makes it difficult for individuals to live their lives in a healthy and productive way.
It’s important to note that money dysmorphia isn’t’ something that only Millennials experience. It could impact someone from any generation and with any amount of wealth.
What Causes Money Dysmorphia?
Money dysmorphia doesn’t appear out of the blue. There are hundreds of reasons and situations that could lead to feelings of insecurity, and no two individuals will have the same story. However, it often develops after a negative financial experience, such as:
Not being able to find a job (or a better job) in an overly saturated job market
Earning less than you expect or feeling you deserve at your current job
Comparing yourself against influencers on social media
Graduating with high levels of student loan debt
Having higher levels of consumer debt like credit cards and personal loans
In addition, someone’s point of view about money could also be heavily influenced by their family of origin and cultural background. They may have grown up with severe financial hardships or were taught habits and lessons early on about money that may have been extreme or no longer relevant in today’s world.
Bottom line, the roots usually run deep and are varied. And even if someone’s financial situation, life circumstance, and/or belief structure changes, they still may struggle shake the distorted money behavior and mindset.
Why Money Dysmorphia Impacts Millennials
I’ve researched financial anxiety quite a bit, and have dug into the topic of money dysmorphia. For me, Millennials are a dichotomy—the research shows that they are stressed about money, but they also report to have responsible money behaviors and be on track for their futures. Other researchers have backed me up.
For example, in a survey from Investopedia, nearly 75% of Millennials surveyed reported feeling at least somewhat stressed about money. But Investopedia also stated that, based on financial literacy and money practices, Millennials are the most financially confident generation they surveyed.
Ok Millennials, what gives?
Perhaps they are being too hard on themselves… maybe they feel that their successes are still not good enough or not keeping up with societal and familial expectations. The “highlight reels” they see on social media could add to the pressure as well.
Another explanation could be the financial environment that Millennials have experienced in formative “early adulting” years until now:
A recession in the early 2000’s that impacted them starting their careers
Crippling student loan debt given the push for and cost of higher education
The rising cost of housing that has made homeownership daunting
A pandemic
Most recently we can add an inflationary economy, a war, and a tough job market to the mix. (Like we needed more?)
One could argue that Millennials have been in a “simmering state” of financial anxiety for much of their adult lives, and even if they have experienced some financial success, the fight-or-flight instincts linger.
The Impacts of Financial Stress
No matter the source, living with financial stress is not pleasant. According to a variety of sources, symptoms of financial stress could mirror emotional or behavioral symptoms experienced with other types of anxiety, such as:
Feelings of depression, hopelessness, or overwhelm
Irritability and/or relational difficulty
Distractedness or difficulty concentrating
And there could be physical symptoms as well, such as:
Loss of sleep
Headaches
Stomach or GI issues
These experiences may be disruptive and may lead to a diminished quality of life if they’re allowed to continue for too long. If the stress is not warranted or could be avoided, it’s important to address the issues and get mental and physical health back to equilibrium.
How to Overcome Financial Dysmorphia
Though negative and even conflicting feelings surrounding money have the potential to be serious, there are things anyone could do to overcome those feelings and get their finances and their relationship with money back on the right track. Are you looking to make a change? Here are a few tips that may help.
Balance Social Media Exposure
Social media presents a double-edged sword. On the one hand, many view it as entertaining and an opportunity to connect with people and ideas that wouldn’t otherwise be possible. When it comes to money, social media may provide education, inspiration, and even feelings of empowerment when exposed to sources of reliable information, positive messages, and varied points of view.
On the other hand, there are those that view social media as a source of false narratives about society, and especially about money. According to recent research, the average Millennial spends almost 2.5 hours each day scrolling through social media feeds. That’s on average more than 17 hours a week of exposure to a potentially one-sided, picture-perfect views that “friends” and influencers post online. Frequent and prolonged exposure to these narratives may lead an unsuspecting or vulnerable individual to fall into a comparison trap and experience negative emotions about their own life and financial situation.
If you feel social media contributes to these negative emotions in your life, it may be a good idea to set clear boundaries. Consider limiting the number of times you allow yourself to log in to certain platforms or set limits on the amount of time you scroll each day.
Social media itself doesn’t have to be the enemy. The key is learning to manage the influence it has on your life as just one input among many. Creating your own path based on your values and goals could help you to filter external messages, including those on social media, through a healthier lens.
Reframe Your Money Mindset
Your money mindset is basically your point of view about money, and ideally it is influenced more by your financial goals and less by your social media feed or advice you receive from peers.
Take some time to consider how you truly feel about money and your financial situation. If you’re uncomfortable with where you are currently, that’s fine. But try to analyze what’s making you so uncomfortable. If you’re consistently saving each month, are on track to repay your debts, and are able to splurge every now and then, those feelings of anxiety may not be based in reality.
Try to identify what’s triggering your worries and look for ways to reduce your exposure to those triggers or to eliminate them entirely.
Improve Your Financial Literacy
If you’re struggling to keep up with the way economic changes and policies impact your finances, start looking for ways to improve your knowledge. Read financial publications or blogs, listen to podcasts, and consider working with a financial advisor. These simple steps may help you gain a better understanding of your financial situation and opportunities to improve your standing if needed. And if you understand the basics of how economic situations impact your finances, you may feel better equipped to pivot strategies to keep your bottom line looking great.
Build a Personalized Financial Plan
While you may not be able to control economic conditions or the markets, there are some things you could do to gain control over your finances. These actions may give you more confidence and peace of mind. Creating a personalized financial plan is a great place to start. Here’s how:
Track your expenses: Get in the habit tracking your expenses to see where your earnings are coming from and what you’re spending your income on. Do this for every transaction as you get started so you know exactly how much you’re spending and where that money is going. This gives you the opportunity to see places to cut back if needed and be more intentional about where you do spend your money.
Take Control of Your Debt: Any debt you have could make it harder to escape feelings of financial anxiety. Prioritize paying down what you’ve borrowed using a debt repayment strategy like the debt avalance or debt snowball method. Once you start paying down your outstanding debts, you’ll potentially free up cash that you were otherwise spending on debt repayment. This could increase your overall disposable income and make it easier to truly feel financially secure, even if your income isn’t going up significantly each year.
Identify your goals: Think about the types of financial goals you have for the short-term and long-term. For example, if you want to take a vacation, you may have a short-term goal of saving a specific amount up before you pack your bags. If you want to pay off your debt, you may want to prioritize paying back what you’ve borrowed over aggressively building your savings. Use these goals to stay motivated and remember to reevaluate your goals as you go.
Set a budget: If you’re not already using a budget to help you reach your financial goals, now could be the perfect time to set one up. Your budget could help you monitor your finances and may make it easier for you to pay off debt or build your savings faster. Do your research to find the right budget system for your needs.
Get Help if Needed
Money dysmorphia could lead to significant stress in your life. If you find that you’re losing sleep, feeling depressed, or just wanting someone to help you find a path forward, consider getting help. Speaking with a therapist may help you overcome feelings of anxiety and working with a financial professional could help you better manage your money and improve your financial (and mental) wellbeing.
Final Thoughts
Your finances could provide an opportunity for you to live the life of your dreams. But if, like many Millennials, you find yourself struggling with money dysmorphia, you may not be allowing yourself to have peace of mind about money—or life—despite your hard work. Luckily, if you recognize these patterns of thinking, you may be able to shift your money mindset on your own. And if your finances could use some work, taking real action through a financial plan could give you some concrete evidence that you’re on the right track.
This article is for informational and educational purposes only and reflects personal opinions and research. It is not medical, mental health, financial, legal, or professional advice. I am not a licensed physician, therapist, psychologist, or financial advisor. Nothing in this article should be interpreted as individualized financial guidance, investment advice, diagnosis, or treatment. Please consult a qualified professional regarding your specific situation.