Have you ever felt like everyone around you is living a life of luxury, dining at expensive restaurants, and flaunting designer goods, while you’re struggling to keep up? You’re not alone. It’s easy to fall into the trap of comparing your financial situation to others, especially in today’s hyper-connected world. This feeling, this distorted perception of your financial standing compared to your peers, might be a sign of what experts are calling “Money Dysmorphia.”
“Everyone else seemed comfortable spending on expensive dinners out multiple times a week, so shouldn’t I be, too?”
Financial literacy experts at Money-Central.com often discuss the dangers of lifestyle inflation, the subtle creep of increasing expenses as income rises. But money dysmorphia is a more nuanced and potentially damaging phenomenon fueled by social comparison and the curated realities we see online. For decades, advertising has played on our desires, subtly (and not so subtly) suggesting we need more to be happy. This “keeping up with the Joneses” mentality has been amplified in the digital age, leading to a widespread sense of financial inadequacy, even when objectively, we might be doing just fine.
Social media has become a highlight reel of spending habits, often detached from reality. We’re bombarded with images of lavish vacations, designer wardrobes, and seemingly endless disposable income. We develop parasocial relationships with influencers and even acquaintances, whose financial lives are often obscured by sponsorships, debt, or simply curated for online consumption.
“The line between different lifestyles feels less defined yet more difficult to traverse — on and offline.”
It’s easy to feel like you’re constantly playing financial catch-up. The common advice to simply “unfollow” and disconnect is easier said than done when these perceived financial disparities exist not just online, but also within our own social circles. The question shifts from “How can they afford this?” to the more unsettling “Should I be able to afford this?” This constant barrage of financial stimuli can warp our sense of our own financial reality, leading us to experience money dysmorphia.
Decoding Money Dysmorphia: More Than Just Financial Anxiety
So, what exactly is money dysmorphia, and how is it different from general financial anxiety? Lindsay Bryan-Podvin, LMSW and Certified Financial Therapist at Mind Money Balance, defines money dysmorphia as: “the distance between a person’s perceived financial status and their actual financial reality.” It’s not a clinical diagnosis in the DSM, but its impact on our financial well-being and mental health is very real.
“Money dysmorphia is the distance between a person’s perceived financial status and their actual financial reality.”
– Lindsay Bryan-Podvin, LMSW and Certified Financial Therapist
Money dysmorphia manifests in two primary ways. Firstly, it can affect individuals who are financially secure but are perpetually convinced they are not. They may have substantial savings but are unable to enjoy their money, constantly feeling like it’s never “enough.” Secondly, it can lead to overspending driven by a distorted perception of their financial health. Individuals might spend beyond their means, failing to recognize or acknowledge the reality of their financial distress, attempting to project an image of affluence to keep up with perceived norms.
Research from Credit Karma indicates that money dysmorphia is prevalent, particularly among younger generations. A study revealed that 43% of millennials and Gen Z individuals experience money dysmorphia. This is distinct from financial anxiety, which is characterized by fear and worry about financial tasks and potential financial insecurity. Financial anxiety revolves around the fear of not having enough or not doing enough financially.
Bryan-Podvin clarifies, “Financial anxiety is more about being fearful of a financial task and experiencing anxious thoughts, feelings, or behaviors when engaging with a financial task (or procrastinating because of the fear of the task). With financial anxiety, there may be a fear that their finances are worse than they are, but they aren’t distorted about the reality of their finances.”
The key differentiator is this distortion of reality. With money dysmorphia, even objective financial success might not alleviate the feeling of falling behind. A staggering 51% of individuals earning over six figures report living paycheck to paycheck, according to a recent survey by Business Insider. This highlights the emotional, often irrational, nature of our relationship with money. Despite logical financial principles, our feelings and perceptions significantly influence our financial well-being.
The Gap Between Perception and Reality: Why Money Dysmorphia Thrives
The core of money dysmorphia lies in the disconnect between our objective financial situation and our subjective financial feelings. Many of us have experienced achieving income goals or promotions, only to find that the increased income doesn’t fundamentally change our feelings about our finances. While a certain baseline income is crucial for covering basic needs and reducing genuine financial stress, beyond that point, the link between income and perceived financial well-being becomes more complex and emotional.
Research supports this idea. A landmark 2010 Princeton University study revealed that emotional well-being increases with income up to approximately $75,000 per year (around $107,844 in 2024, adjusted for inflation), after which it plateaus. However, younger generations perceive a significantly higher income as necessary for happiness. An Empower study found that Gen Z believes they need an annual salary of $128,000 to be happy, while millennials estimate a whopping $525,000.
These inflated figures likely reflect the perceived cost of a desired lifestyle, heavily influenced by social comparisons and aspirational imagery. It’s about the perceived gap between our current lives and the lifestyles we believe we should be living based on societal cues and the curated realities we observe around us.
“My dream was based on a life I thought everyone else had or was on their way to getting, not my individual desires.”
For example, someone living in a high-cost-of-living city might dream of a luxurious apartment and an extravagant lifestyle, believing this is the norm or the expected level of success. This aspiration, often fueled by external comparisons rather than genuine personal desires, can become debilitating and morph into money dysmorphia when it creates a persistent feeling of financial inadequacy, regardless of actual circumstances.
Bryan-Podvin suggests several contributing factors to money dysmorphia: “Perfectionism, depression, anxiety, low self-worth, or self-esteem are common reasons [that contribute].” These underlying emotional vulnerabilities can amplify our susceptibility to social comparison and distort our financial self-perception. When our self-worth becomes intertwined with our financial status, we risk assigning disproportionate importance to money, viewing it as a measure of our value rather than a tool. This can lead to a relentless pursuit of wealth accumulation, often without a clear sense of purpose or fulfillment.
Reclaiming Your Financial Reality: Strategies to Downsize Money Dysmorphia
Confronting money dysmorphia requires a shift in perspective and practical strategies to realign our financial perceptions with reality. Here are actionable steps to help you downsize money dysmorphia and cultivate a healthier relationship with your finances:
- The Priceless Inventory Exercise: Consider what you possess that is truly invaluable. Think about loved ones, cherished memories, or irreplaceable family heirlooms. Reflect on the fact that you wouldn’t trade these things for any amount of money. This exercise, circulating on social media, powerfully reframes our understanding of wealth. It highlights that true richness lies in non-material aspects of life, shifting our focus from financial accumulation to appreciating what we already have.
“If you wouldn’t give them up for millions of dollars — congratulations, you now have millions of dollars.”
This simple thought experiment challenges the constant messaging that bombards us, telling us we are perpetually lacking and need more to be happy or successful. It encourages gratitude for our existing blessings and helps us identify what truly matters to us beyond material possessions. By recognizing the non-monetary wealth in our lives, we begin to diminish the perceived importance of financial accumulation as the sole determinant of worth.
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Values-Based Financial Goal Setting: Instead of chasing a multitude of vague financial goals driven by external pressures, identify 1-3 financial goals that are deeply aligned with your personal values. Focus on what truly brings you meaning and purpose. This could be saving for experiences that create lasting memories, supporting causes you believe in, or investing in your personal growth and well-being. By aligning your financial actions with your values, you create a more meaningful and fulfilling financial path, reducing the susceptibility to external comparisons and the distorted perceptions of money dysmorphia.
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Embrace Financial Transparency and Regular Engagement: Confront your financial reality directly and regularly. Develop the habit of reviewing your finances without judgment or avoidance. Track your income, expenses, and savings. Facing the facts, without adding emotional disclaimers or distortions, is crucial for grounding yourself in your actual financial situation. Regular engagement with your finances reduces the power of distorted perceptions and fosters a more objective and realistic understanding of your financial health.
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Challenge Unhelpful Financial Beliefs: Identify and actively challenge negative or distorted beliefs about money that contribute to your money dysmorphia. Are you comparing your financial journey to unrealistic portrayals online? Are you equating net worth with self-worth? Consciously question these beliefs and replace them with more balanced and realistic perspectives. Remember that financial well-being is not solely defined by income or net worth, but also by financial security, peace of mind, and the ability to live a life aligned with your values.
“Since money dysmorphia is about distortion, getting past it is about seeing your reality.”
Ultimately, overcoming money dysmorphia is an emotional journey as much as a practical one. It involves healing underlying insecurities and shifting our focus from external validation to internal contentment. By closing the gap between who you are and who you think you should be, you can break free from the illusion of money dysmorphia and cultivate a healthier, more grounded relationship with your finances.
Langa Chinyoka is a Contributing Editor at The Good Trade. She is a writer and strategist based in Los Angeles. (Note: Keeping the author bio as in the original article, as per instructions to maintain original spirit, though in a real scenario for money-central.com, a different author bio would be used.)
