Millennials Are Suffering from “Money Dysmorphia”

We’re all familiar with the idea of “keeping up with the Joneses,” where we overspend because we feel insecure about our finances and believe others to be further ahead than we are. That’s a form of money dysmorphia, the idea that how somebody perceives their financial situation is different than the reality of their financial situation. But it can skew the other way, too: folks who are doing fine or better than fine financially, but always feel behind-the-curve.

That form of money dysmorphia is far more common, says financial therapist and author of The Financial Anxiety Solution Lindsay Bryan-Podvin. And millennials are actually far more susceptible to it than other generations.

It’s the person walking around saying, “I’m so poor, I can’t afford this,” when, objectively, they have a good income, explains Bryan-Podvin. Or the friend who won’t meet you for coffee because they’re worried a $6 latte will bankrupt their 401k. Heck, it’s the parents who have saved the full amount for college only to lie awake gripped with the anxiety that it’s still not enough.

“We’re talking about someone who is distressed by every single dollar spent, even when they can afford to spend it,” Bryan-Podvin explains. And it can have a debilitating effect for the millennial generation.

“We used to associate money dysmorphia with our great grandparents or grandparents,” Bryan-Podvin explains. “People who grew up in the Great Depression. They’d save the orange slice garnish when we would go out to eat and bring it home to eat later, right? But that made sense because, at one point, they experienced financial distress and that mindset was hard to let go of.”

“You’re bad if you buy a bag. If you go out to brunch when you have eggs in the fridge, it’s morally wrong and you have no willpower. It’s really hard when you’re subjected to those messages everywhere.”

Lindsay Bryan-Podvin

Millennials, similarly, came of age right around the Great Recession, and later watched housing prices and cost-of-living skyrocket in the aftermath of a global pandemic. And, unlike previous generations, we spend our free time doomscrolling through social media feeds that highlight financial extremes and/or demonize spending choices. “You’re bad if you buy a bag. If you go out to brunch when you have eggs in the fridge, it’s morally wrong and you have no willpower,” Bryan-Podvin explains. “It’s really hard when you’re subjected to those messages everywhere.”

Indeed, a recent survey led by Intuit Credit Karma found that 1 in 4 Americans experience money dysmorphia, but the feeling is much more pronounced among younger generations (43 percent of Gen Z and 41 percent of millennials, compared to 25 percent of Gen X).

Millennials are also the sandwich generation. “As more and more social safety nets are getting pulled away or are thinner than they were 20 years ago, this creates fear and uncertainty. We see women leaving the workforce in order to save on childcare or people going bankrupt because of a medical diagnosis. Even if we’re not directly experiencing it, this is where money dysmorphia can really set in.”

The result of all of these experiences is something Bryan-Podvin calls “heuristics,” which speaks to the mental shortcuts we create in order to process the thousands of decisions we make each day (“what will I eat for lunch?” or “what am I going to wear?” for example). It might begin as something simple like, “If I skip buying a latte, I’ll save $6 when I’m living paycheck to paycheck.” But 15 years on, when we can now actually afford it, we haven’t amended that shortcut.

This distorted view of one’s finances can lead people to act irrationally, resulting in poor choices (everything from overspending to panic-saving and hoarding) that curtail progress and make life less fun to live. In other words, if your skewed perspective breeds irrational insecurity, anxiety and a chronic feeling of never having enough when you actually do, that's a problem.

So, what’s the solution? And how can you spot money dysmorphia in yourself? Per Bryan-Podvin, it all goes back to those mental shortcuts. “Let’s say you have a friend who invites you out to join a pickleball league—a sport you’re interested in—and your immediate response is no. This is a good cue to check in with yourself and ask, ‘OK, where is this coming from?’” she explains. Is it because you don’t have the time to commit? Or is it because you’re ruminating about a financial cost despite there being evidence that you can afford it? “It’s worth getting curious,” Bryan-Podvin says.

Alternately, “I know so many people who will spend months looking at a pair of shoes and reading reviews and trying them on, but will not buy them. And by the time they finally give themselves permission, they’re not available in their size anymore,” Bryan-Podvin explains. “For people with money dysmorphia, it’s worth getting clear about how you can tolerate a financial mistake. Is $110 spent on those shoes going to prevent you from getting groceries? If the answer is no, [you] need to spend time getting comfortable handl[ing] a perceived financial mistake.” (So the shoes gave you blisters—let’s find out if you can return them.)

But there’s another critical step. Far too often, people are saving or setting financial benchmarks without connecting their dollars to a specific purpose. (“When I have X dollars saved, I’ll go on vacation all the time, for example.) “Once you have a handle on what’s coming in, what’s going out, how you’re contributing to your retirement and emergency funds, it pays to get clear on the spending and saving values that feel good to you.”

Finally, practice those worst-case scenarios. “To be clear, this isn’t, ‘How would I handle it if I got a terrible medical diagnosis and I couldn’t pay those bills?’” Bryan-Podvin says. “It’s asking yourself, ‘How would I handle it if I went out to brunch and spent $25 on a meal I didn’t like?’ That can feel bad, but it’s not the end of the world. It’s about practicing your comfort level.”

She also recommends giving your money a job. Automate your savings, set a specific spending allowance for the things you enjoy and schedule a monthly (or even quarterly) money check-in. The goal isn't to convince yourself you’re wealthy when you’re not. It’s to replace a distorted, anxiety-based sense of financial security with something measurable.