How Money Dysmorphia Can Hurt Your Mental Health and Finances

The rise of the financial influencer on social media, heated discussions around inflation and economic uncertainty, and the all-too pervasive “comparison culture” we live in have all fueled a surge of “money dysmorphia” among Gen Z and millennials.

Long story short, money dysmorphia happens when someone has a distorted view of their financial situation—often leading to feelings of financial insecurity or inadequacy—even when they are in a stable position. 

“This distortion can come from financial anxiety, past experiences with money (like financial trauma), or constant comparison with others, especially with social media showcasing lifestyles that feel unattainable,” explains Smriti Joshi, MPhil, chief psychologist at Wysa. She adds that it can also be triggered by traumatic, finance-altering events, such as unexpected unemployment or a relationship breakup, that exacerbate underlying financial anxieties. 

Ahead, we’re diving deeper into the topic of money dysmorphia, including signs to look for (some of which may be more subtle than you’d think), why this mindset can be so damaging, and how to overcome the spiral and find some peace. 

Signs of Money Dysmorphia 

How can you tell if you’re experiencing money dysmorphia? Here are some signs to look for, according to Dr. Joshi. She notes that every person is different, and money dysmorphia can manifest in unusual and unexpected ways, so this list is by no means exhaustive:

• Constantly worrying about not having enough money, even when financially stable
• Obsessing over small expenses or feeling paralyzed in making financial decisions
• Avoiding spending altogether
• Comparing your financial situation to others, leading to feelings of inadequacy
• Avoiding conversations about money out of anxiety
• Feeling guilt or shame after spending (even on essentials)
• Feeling compelled to earn more, even if you have reached financial independence
• Buying expensive and unaffordable items to feel adequate and happy

While financial uncertainty is grounded in objective financial struggle, money dysmorphia stems from perceived inadequacy, often influenced by societal pressures, comparisons, or personal anxiety.

Why Do We Experience Money Dysmorphia? 

Money dysmorphia can manifest for all sorts of reasons, and every case is a little different from the next. However, conversations around economic uncertainty, a rise in comparison culture and hustle culture, past trauma (relating to money or not), and unique personal tendencies can all contribute to money dysmorphia.

“Some hypotheses about what may contribute to money dysmorphia include perfectionism, depression, anxiety, low self-worth, and low self-esteem,” says Lindsay Bryan-Podvin, LMSW, CFT, a certified financial therapist for Cash App. “On top of everything, we have more access than ever to how people present financially. We see the fancy dinners on Instagram, the far-flung vacations on TikTok, and the new family car on Facebook.”

All of the above might lead to more of us feeling "behind" when we compare ourselves to what we see. (But do note that we don’t actually see others’ bank accounts!)

Prevalence Among Gen Z and Millennials 

Younger generations, in particular, are more apt to experience money dysmorphia compared to older generations. In fact, a 2024 study conducted by Credit Karma found that 43% of Gen Z and 41% of millennials experience money dysmorphia.

“This is partly due to the fact that the younger generation spends more time on social media,” says Jenny Woo, PhD, MBA, CEO of Mind Brain Emotion. “A 2023 survey for Edelman Financial Engines found that people who spend more than three hours a day on social media are more prone to make irrational financial decisions.”

Dr. Joshi adds that Gen Z and millennials also face unique financial pressures, including student loans, an uncertain job market, high living costs, and pressure to spend more to ‘fit in’ with their peers.

Why It’s Important to Stop Money Dysmorphia 

Money dysmorphia can lead to constant stress, avoidance of financial issues, and unhealthy financial behaviors, not limited to extreme saving or impulsive spending. “At best, it can cause unnecessary stress around finances, and at worst it can push people into bankruptcy through overspending. Addressing money dysmorphia is critical to developing financial confidence and maintaining a balanced life,” Dr. Joshi says.

Left unchecked, it can also harm relationships, as constant stress over finances can create tension with partners or lead to isolation from friends.

6 Strategies for Overcoming Money Dysmorphia

Overcoming money dysmorphia can be difficult because it requires a "re-routing" in our brains. Still, it’s possible to navigate your way out of this mindset.

1. Reframe Money as a Tool 

First, see money as a tool rather than a measure of your self-worth or an irradicable aspect of your personality. Dr. Woo says, “This shift from a scarcity mindset is essential for reducing the toll of obsessive financial worries. By reframing how you view money, you allow yourself to break free from the unrealistic expectations and comparisons that fuel money dysmorphia.”

2. Identify Anxious Thoughts

Anxious feelings around money are common, but how we respond to these thoughts can change how they ultimately impact us.

“Becoming aware of your anxious thoughts around money without immediately reacting to them can help you catch the spiral before it deepens,” Dr. Joshi says. “Consistent mindfulness gives you space to challenge these thoughts and shift to a healthier perspective.”

3. Challenge Unhelpful Beliefs

Get comfortable challenging unhelpful beliefs about money. “If you find yourself thinking, ‘I'll never understand money, so there's no point trying,’ then get curious about where that belief came from and whether or not it's true,” Bryan-Podvin says.

“It might be true that you paid a credit card bill late, but it doesn't mean you'll be bad with money forever,” she says. You’ll instantly feel empowered when you take control of your money story, beliefs, and trajectory.

4. Be Mindful With Social Media 

Remember that social media is a highlight reel of people’s best experiences. They’re less apt to take pictures of that surprise bill or the debt they owe on a credit card or mortgage, and more likely to showcase the things they’re excited about. You probably even do the same! Whenever scrolling, remind yourself that you’re not seeing an accurate full picture—just a snapshot. 

5. Examine Your Financial Reality 

Create a plan to look at your money on a regular schedule. “It could be once a week or once a month, but facing the reality of your finances is a key step in dealing with money dysmorphia,” Bryan-Podvin says. “It can be helpful to do this with someone, like a roommate, partner, or even therapist, to provide you with emotional support.”

Dr. Joshi adds that establishing a budget or savings plan can give you clear data on your finances, helping reduce anxiety around uncertainty. “Knowing exactly where your money is going allows you to base decisions on facts rather than fear,” she says.

6. Cultivate Gratitude 

Another strategy for overcoming money dysmorphia is cultivating gratitude for what you have. This may sound cliche, but research tells us that gratitude is an incredible game-changer when it comes to our mental well-being. “Instead of focusing on your financial shortcomings, practice reframing your thoughts to acknowledge and appreciate your financial accomplishments no matter how small,” Dr. Woo says.

Money issues don’t define your worth as a person; anyone can struggle with financial difficulties or experience anxiety about them. The universality of financial stress makes it all the more important to normalize conversations around money. If you continue to feel anxious about money, seek support and coaching from a therapist and/or a financial coach.