Gen Z and millennials are more likely to experience ‘money dysmorphia,’ according to study

‘Money dysmorphia is kind of like today’s version of keeping up with the Joneses,’ financial advisor says

A new report indicates almost half of young adults experience “money dysmorphia”.

According to a report from Qualtrics commissioned by Intuit Credit Karma, 29 per cent of Americans say they often find themselves comparing their financial situation to others, sparking feelings of inadequacy and insecurity. While surveying 1,006 US adults above the age of 18 from 18 to 26 December 2023, researchers found that these feelings were found predominantly among younger adults, specifically 43 per cent of Gen Z and 41 per cent of millennials.

This new phenomenon was defined as “money dysmorphia,” which describes the distorted view of one’s finances, and how it could contribute to poor decision-making as a result. Those who experienced this issue were more likely to feel financially behind their peers, with 82 per cent reportedly noting that they struggled with financial insecurity.

However, despite 48 per cent of Gen Z and 59 per cent of millennials reporting they feel behind, 59 per cent of respondents throughout the entire survey said that they felt financially stable, indicating a divide between the way they see themselves and their reality.

The scarcity mentality that has led to a distorted perception among young adults concerning their finances is unsurprising, given the fact that both Gen Z and millennials have experienced “once in a lifetime” or “generation-defining” events at impressionable young ages. Growing up during a financially tumultous time can be traumatising, with psychologists noting that events like the 2008 recession or the 2020 pandemic will have a lifelong impact on all who have experienced them.

But even those who have experienced relative financial stability throughout their lives may experience a distorted perception of their finances, which experts consider to be more dangerous. Being constantly bombarded with imagery of your peers or favourite celebrities flaunting their affluent lifestyles can be overwhelming and ultimately breed dissatisfaction with a stable, normal life.

“Money dysmorphia is kind of like today’s version of keeping up with the Joneses,” Credit Karma consumer financial advocate Courtney Alev explained. She added that this “distortion between perception and reality” was driven by the omnipresence of social media and a byproduct of a wealth-obsessed society.

Nearly 25 per cent of Americans said that they felt less satisfied with their financial circumstances due to social media, according to a study from Edelman Financial Engines. The dissatisfaction with the state of their own lives often leads people to spend outside of their means, including splurging on purchases like luxurious vacations, home renovations, or designer clothes.

“A few ways to overcome money dysmorphia are to take an honest look at your finances, set clear goals, make a plan, and, most importantly, keep your eyes on your own paper,” Alev advised consumers. “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. From there, you can schedule automatic payments from each paycheck to help hold you accountable and incrementally increase your savings.”

Financial experts note that by distancing oneself away from the onslaught of content on social media, you can focus on investing in yourself and building your wealth. By not falling into traps of comparison, you are more likely to prioritise what works for you than what you’ve seen online.