Younger generations experience 'money dysmorphia' in the race to become wealthy

The economy has been challenging for newer generations, making it difficult for young people to maintain healthy financial habits. This struggle has led to feelings of inadequacy among Gen Z and millennials, who are often fixated on the idea of “being rich,” a condition termed “Money Dysmorphia,” according to Intuit Credit Karma. The report noted that these generations are “obsessed” with becoming wealthy, leading them to constantly compare their financial status to others. Over 40% of Gen Z and millennials feel left behind and believe they are not doing well financially.

According to the study, 29% of Americans experience money dysmorphia, a distorted view of their financial situation. Additionally, 14% of Americans consider themselves wealthy but exaggerate what it means to be a “wealthy individual,” according to Edelman Financial Engines. This term is more about people comparing their earnings and situations to others, which leads to insecurity. The study also revealed that younger generations, specifically millennials and Gen Z, are particularly affected.

Gen X and boomers account for only 25% and 14% of the population that experience money dysmorphia, respectively. Younger individuals feel they are lacking or falling behind in the financial category. However, the study showed that there is almost an equal percentage of people who also feel like they are financially stable. It has proposed the distortion between reality and insecurity among Gen Z and millennials. Money dysmorphia has more to do with the thirst to feel rich. It has caused people to avoid saving and overspend, impacting their financial habits negatively. Instead of saving, people are indulging in spending and falling into debt, hoping to get back into the financial race.

The phenomenon has caused younger people to fall into a chaotic confusion between a luxurious lifestyle as peers and others and a frugal and realistic living, per the Independent. Courtney Alev, Consumer Financial Advocate at Credit Karma, pitched in, “A lot of people are examining their finances and comparing themselves to their peers, people on social media, and even celebrities, which is bringing up feelings of inadequacy. This distortion between perception and reality can prevent people from taking steps towards achieving their financial goals.” One of the sources of money dysmorphia is social media. Alev mentioned that there are ways to control and curb money dysmorphia, but it begins with “keeping eyes on one’s paper.”

People need to learn to ditch the comparison and focus on their goals. “Take an honest look at your finances, set clear goals, make a plan, and, most importantly, keep your eyes on your paper. If your goal is to build up your savings, start by doing an audit of your finances to see where in your budget you can make room for savings,” Alev suggested. The study also suggested focusing on investments and savings rather than trying to build an exquisite lifestyle haphazardly. Alev even pointed out using scheduled payments and being accountable for the spending to get through the money dysmorphia phase and grow financially.