- Money dysmorphia is a negative or unrealistic perception of one's financial wellness.
- A financial therapist says millennials and Gen Zers are more prone to experiencing money dysmorphia.
- She said life transitions, self-comparison, and outdated ideas about money can fuel this perception.
Gen Zers generally have more job flexibility and access to information about money than their parents did. Still, not everyone feels good about their financial futures.
Last year, Business Insider surveyed more than 600 adult Gen Zers about the financial responsibilities that caused them significant stress, and almost half indicated they were concerned about saving money.
Amanda Clayman, a financial therapist who hosts a podcast called "Emotional Investment," defined money dysmorphia as "a negative and unrealistic perception of one's financial wellness or financial position." In a survey conducted in December by Credit Karma, 43% of Gen Z respondents and 41% of millennial respondents reported experiencing money dysmorphia, whereas 25% of Gen Xers and 14% of respondents 59 or older said the same.
Money dysmorphia goes beyond wanting to pay off some credit-card debt or to contribute more to a 401(k). Clayman described it as "pervasive worry, vigilance — like an internalized feeling of unsafety with money," even when there aren't pressing financial problems to solve.
Clayman argued that younger generations are more likely to have warped views of their finances — but that might be more financially stable than they give themselves credit for.
Big life transitions bring on introspection
In general, Clayman said, people prone to catastrophizing "find that money is something that is very easy to worry about."
She said people in their mid-20s to mid-30s also tend to going through more life transitions — they might be saving up for a wedding, a house, a career change, or a family.
But she added that these people might also not have a clear idea of how much they need to have saved up, other than a lot.
She said that the more ambiguous or abstract a financial goal is, the easier it is to feel like you're nowhere near achieving it.
"Once you're in a later stage of life, you have a little bit more information that you can access," she said.
Self-comparison fuels money dysmorphia
Clayman argued that a tendency of younger people to compare themselves to others they see on social media could warp their sense of financial benchmarks.
"We can never know all of the intimate details of a person's financial picture and their history," she said. "We are creating a pattern that tells a story based on the incomplete information that we're picking up."
That couple with the dream wedding could be in credit-card debt. That friend who goes on four international trips a year could have a trust fund.
Constantly being bombarded with images of luxury restaurants and impeccable homes can perpetuate undue worry and doubt about one's own finances.
"All we have to do is open Instagram and be flooded with confirmation that there are lots of people out there who are having fun and going places."
Some expectations around money are dated
While parents can teach their kids valuable lessons about saving, not all the money rules that pertained to Gen Xers and boomers translate to today's economy.
For example, Clayman said, generations growing up in the postwar era were more likely to have pension plans, while retirement is largely self-funded now. Plus, factors like inflation and a higher cost of living can make it harder for younger people to stick to strict saving schedules.
Clayman said that while not all advice about money is wrong, it can become harmful if someone starts hoarding money or overworking to try to follow it. She suggested the most productive route for people feeling anxious about money is to take in different financial perspectives and make a budget — one that's realistic and shame-free.
