Whether it’s tracking your friends with Find My Friends on your iPhone, feeling jealous on Instagram or checking out career updates on LinkedIn, in a world where perceptions are formed based on our internet presence, it’s impossible to avoid the social media comparison game.
A recent survey by Intuit Credit Karma found that about 45% of Gen Z and Millennials are obsessed with the idea of becoming rich, while about 48% of Gen Z and 59% of Millennials said they feel like the goal is out of reach.
The study calls this feeling, where people have a distorted view of their financial situation and often perceive their financial situation as worse than it actually is, “financial dysmorphia,” which psychology defines as a condition in which people become irrationally critical of their bodies.
So, financial experts say, money dysmorphia is akin to cognitive dissonance, or the feeling of a gap between where you are and where you should be.
What causes financial dysmorphia?
All kinds of social media updates about travel, health, career, events, beauty, body, relationships, money, food, etc. lead to self-comparison and self-doubt, which is a major cause of financial dysmorphia.
New York-based personal finance website Bankrate quotes Dr. Lanre Dokun, psychiatrist and founder of Healthy Minds NYC, as saying: “Reality TV and social media give people a realistic view of these lavish lifestyles, taking viewers into their homes and making these lives seem, in some way, normal.” Constant exposure to an idealized lifestyle can create feelings of inadequacy and anxiety.
Money dysmorphia can also lead to extreme financial behaviors, like overspending and portraying oneself as wealthy. Experts say that people who were poor as children may suddenly feel the urge to flaunt their wealth on social media as adults.
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Erica Kullberg, an attorney and personal finance expert, emphasized that the shadow cast by financial dysmorphia can “freeze some people.” “They may avoid money decisions, miss out on opportunities, and remain in financial distress,” Kullberg told Bankrate.
According to a Credit Karma survey, 69% of financially unstable respondents said they don’t believe they’ll ever be rich, and 95% said their financial obsession has negatively affected their finances: It keeps them from saving, buying a home, or investing, and instead leads them to overspend and get into debt.
How to overcome financial dysmorphia?
Courtney Aref, a consumer finance advocate at Credit Karma quoted by Fortune magazine, said the only way to overcome financial numbness is to “rely on hard data”: Stay on top of your finances, evaluate your goals, and make a realistic plan to get there.
Kullberg said people should become financially literate to have a clear and accurate understanding of their financial situation. “Financial education can alleviate a lot of fears and misconceptions.”
“Social media and celebrity culture can exacerbate financial phobia because we see images of people living glamorous lives and spending money,” Scott Lieberman, founder of Touchdown Money, told GoBankingRates, “but we don’t know the truth about how they got their money or how much debt they owe.”
Setting a monthly budget can help you manage financial instability by giving you a clear picture of your income and expenses.
