This nefarious phenomenon is destroying people’s finances

Loud budgeting. Slow shopping. Math girl. These days, there are endless funny terms to describe trends and phenomena in the field of personal finance.

One of the most insidious realities affecting people’s financial health also has a name: money dysmorphia.

To help keep negative influences at bay, HuffPost asked experts to break down the phenomenon and share their tips for dealing with it.

“Money dysmorphia is when you have a skewed or distorted view of your finances,” said Danielle Desir Corbett, a personal finance expert and host of “The Thought Card” podcast. “You see your financial situation very differently from your reality. Money dysmorphia can be caused by a number of reasons, including past money trauma, social pressures, economic crisis, or it can be deeply rooted in childhood upbringing.

A recent study by Credit Karma found that 29% of Americans experience money dysmorphia.

“Money dysmorphia is a game of keeping up with the Joneses, except that the inability to ‘keep up’ is causing some people to experience feelings of inadequacy,” said Courtney Alev, a consumer financial advocate at Credit Karma.

Survey data reveals the issue is particularly prevalent among younger generations, as 43% of Gen Zers and 41% of millennials reported experiencing money dysmorphia, compared to 25% of Gen Xers and 14% of those age 59 years old and above.

“While the term is new, the feelings are not,” said Dasha Kennedy, creator of The Broke Black Girl and a financial wellness board member at National Debt Relief. “Many people have felt financially insecure for a long time without having a specific name for it. Now, by giving it a name, it’s easier to understand and deal with these feelings.”

People have long worried about money and feel like they don’t have enough – even when they do. The problem seems to have worsened, however, in the online age.

Elizabeth Ayoola, a personal finance expert and writer at NerdWallet, told HuffPost that she believes people’s skewed view of their finances “is often shaped by comparisons to others they see on social media or by receiving economic news that creates concern”.

“When people have money dysmorphia, they are likely to view their finances more subjectively than objectively,” she added.

“Money dysmorphia can often lead people to believe they are financially worse off or better off than they really are,” Ayoola said. “This can appear as oversaving because you feel you are behind compared to your peers. Likewise, it can appear as overspending because you feel financially secure when you are not.”

If you have Money dysmorphia, you may feel strong emotions about your finances when you see friends reach financial milestones, she added. Feelings like sadness, anxiety, stress, frustration, unworthiness, or overconfidence can lead to behaviors that harm your financial health—like overspending on vacations.

“People can find themselves living a lifestyle they can’t afford,” Ayoola explained. “Conversely, people who are financially secure may not live full and abundant lives because they believe they don’t have enough, even though their financial reality may say otherwise. Ultimately, money dysmorphia can prevent people from reaching their financial goals or enjoying their accomplishments.”

By oversaving, people with money dysmorphia may miss out on opportunities to invest and grow their wealth.

“Some people can be afraid to spend money, even on things they really need,” Kennedy said. “Others may constantly worry about their finances, regardless of their current situation. They may feel anxious or guilty when making purchases, including essential ones.”

She noted that common signs of money dysmorphia include obsessive checking of bank balances, avoiding financial discussions, comparing oneself to others, having a distorted perception of wealth, fearing financial ruin, being overly critical of decisions your financial situation and stress about future finances.

For younger generations in particular, there is also a temptation to relate their feelings about their financial situation to what they see and present on social media, even if it is not reality. Many avoid addressing or seeking help with their debt, which fuels a cycle of financial instability.

“Impact goes beyond money,” Kennedy noted. “It can strain relationships and affect overall well-being. People can also end up depriving themselves of basic needs and joys, which can be detrimental to mental and physical health.”

“Some ways to overcome money dysmorphia are to take an honest look at your finances, set clear goals, make a plan and, most importantly, keep your eyes on your paper,” Alev said. “If your goal is to build your savings, start by doing an audit of your finances to see where in your budget you can make room for savings. From there, you can schedule automatic payments from every paycheck to help you be responsible and gradually increase your savings.

Set realistic financial goals and find helpful resources for personal finance education. Consider seeking professional guidance from a financial planner or therapist, or simply reaching out to your support system as you pursue your goals.

“Connect with an accountability buddy that you can bounce ideas off of, share with, and cheer on,” Desir-Corbett said. “Observe your daily thoughts about money. Identify and avoid triggers and distractions. Unfollow social media accounts that promote financial insecurity. Spend time listening to personal finance podcasts or reading books to close any knowledge gaps, especially around areas vulnerable.”

Another helpful approach for those experiencing financial dysmorphia is to try to assess their personal finances with an objective lens before judging how they are doing.

“That means looking at their income and expenses to see if their cash flow is on the positive or negative side,” Ayoola said. “Another strategy is to focus on measuring their achievements based on their progress towards financial achievement rather than that of their peers. While comparison can be healthy in some cases, everyone is on a different financial journey, so sometimes it can do more harm than good.”

As you pursue a healthier relationship with money, Kennedy advised practicing self-compassion

“Realize that it’s okay to spend on necessities and things that bring joy,” she said. “Financial care is good, but not when it harms your well-being. Financial care doesn’t have to put you in a constant state of inaction. You need to understand when financial worries become too much. Finding a balance is key.”