Why Is Gen Z Suffering From Money Dysmorphia? How Much Is Self-Comparison To Be Blamed?

In the world where perception is built based on your presence on the Internet, whether it is tracking friends on Find My Friends on iPhone or feeling envious on Instagram or seeing a career update on LinkedIn, one cannot just avoid the comparison game on social media.

A recent survey by Intuit Credit Karma has shown that nearly 45% of Gen Zers and millennials are obsessed with the idea of being rich. Around 48% of Gen Zers and 59% of millennials say they feel the goal is out of their reach.

The survey called this feeling “money dysmorphia” wherein people have a distorted view of their finances, often finding their financial situation worse than it is. Psychology defines “dysmorphia” as a condition in which people feel irrationally critical about their bodies.

Thus, money dysmorphia is more like a cognitive dissonance, that is, feeling a gap between where you are and where you should be, as per financial experts.

What is the Cause of Financial Dysmorphia?

All kinds of social media updates on travel, health, profession, events, beauty, body, relationships, money and food lead to self-comparison and self-doubts, which are primary causes of money dysmorphia.

New York-based personal finance website Bankrate quoted Dr. Lanre Dokun, psychiatrist and founder of Healthy Minds NYC noted, “Reality TV and social media give people an on-the-ground perspective of these lavish lifestyles. It brings you into their homes and sort of normalises this kind of life.” This constant exposure to idealised lifestyles can create a sense of inadequacy and anxiety.

Money dysmorphia can also lead to extreme financial behaviours such as overspending to projecting an image of wealth. People who have been poor in their childhood, suddenly feel the urge to display their money during adulthood on social media, as per experts.

Erika Kullberg, attorney and personal finance expert, highlighted that the shadow that money dysmorphia casts might “cause some people to freeze”. “They avoid making any decisions concerning money, potentially missing opportunities and remaining financially underwater,” Kullberg told Bankrate.

According to the Credit Karma survey, 69% of money-dysmorphic respondents said they don’t think they’ll ever be rich, and 95% say their obsession negatively impacts their finances. The preoccupation has held them back from accruing savings, buying a home or investing, and instead has led them to overspend and even take on additional debt.

How to Overcome Money Dysmorphia?

Courtney Alev, a consumer financial advocate at Credit Karma, quoted by Fortune, said the only way out of money dysmorphia is “relying on the hard data”. One should keep a tab on their finances, assess goals, and make a realistic plan to work towards them.

Develop financial literacy in order to gain a clear and accurate understanding of your financial situation, said Kullberg. “Education on financial matters can relieve many fears and misconceptions.”

“Social media and celebrity culture can exacerbate money dysmorphia, because we’re seeing images of people living glamorous lives spending money,” Scott Lieberman, founder of Touchdown Money, told GoBankingRates. “But then again, we don’t know the truth as to how they got that money and how much debt they’ve accumulated.”

Establishing a monthly budget can help manage money dysmorphia by providing a clear picture of your income and expenses.