How Money Dysmorphia Relates to Mental Health

Money dysmorphia isn't an official mental health diagnosis, but a term that's been recently gaining in popularity online—especially among younger generations. Influencers, bloggers, journalists, and even some financial and mental health professionals have been using the term to describe certain types of financial anxiety. You may be wondering how to determine if you experience money dysmorphia and if your current financial situation should genuinely be stress-inducing or if your worries stem from financial trauma. Read on to learn more about this phenomenon as well as tips to help you improve your relationship with money.

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What is money dysmorphia? 

The term "money dysmorphia" first gained in popularity on social media and blogs. Then, its popularity became even more mainstream when The New York Times featured the term in a June 2024 article, defining it as "a nagging insecurity about one's finances" that continues "even when one is on solid footing." 

When a person has money dysmorphia, they may experience unrealistic expectations about how much they should be earning or should have saved. They may feel like they lack financial stability, even when financially stable. As a result, they may make fear-based financial decisions, especially in the face of financial challenges. Seeing repeated images and videos displaying wealth on social media are thought to potentially contribute to unrealistic financial goals and other expectations surrounding money, especially among people of a young age.

The origins of the term “money dysmorphia”

Money dysmorphia isn't an official mental illness that mental health professionals diagnose. For that reason, it can't be found in the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders (DSM). That said, its name was likely inspired by body dysmorphia, a symptom of body dysmorphic disorder, which is found in the DSM. When a person experiences body dysmorphia, they believe that certain parts of their body are deeply flawed, though they look fine to others. 

Many people use the term money dysmorphia similarly. In this meaning, the term describes people who are worried about their money situation, even though it's fine. However, the term is loosely defined, and many people on social media use it as a more broad synonym for worries about economic uncertainty or one's financial situation, whether those worries about having enough money are accurate or not.

How common is money dysmorphia?

According to the report, the rate of money dysmorphia varied widely across age groups. It suggests that:

• 43% of Gen Z respondents experience money dysmorphia
• 41% of millennials experience money dysmorphia
• 25% of Gen X experience money dysmorphia
• 14% of respondents age 59 or older experience money dysmorphia

Do you experience money dysmorphia?

If you've worried about your financial situation or felt stressed that you haven't yet reached the level of financial success you would like, you may be wondering if you have money dysmorphia. Since money dysmorphia isn't an official diagnosis, there are no diagnostic criteria to determine if a person has it. However, based on the various articles that have been written on the topic, there are repeating themes that may suggest a person has money dysmorphia.

Signs that you might experience money dysmorphia

To have money dysmorphia in the way that it's most commonly defined, you need to both worry about money and have evidence that those worries are misaligned with reality. Examples of money-related unease or stress that signals a person may have money dysmorphia may include:

• The feeling that one is "behind" on their finances compared to their peers
• An obsession with becoming rich, or a feeling that one isn't good enough unless they become wealthy
• A feeling of deprivation when a person can't afford luxury goods
• Ongoing worries about unexpected employment, bankruptcy, or financial ruin
• A desire for complete financial independence and the belief that if one has to work, they are financially insecure
• Feelings of financial inadequacy 
• Worry that one doesn't have enough savings or financial worth
• Beliefs about money leading to overspending in a desire to "keep up with the Joneses"
• Beliefs about money leading to under-saving or taking on debt

The second part of determining if a person may have money dysmorphia involves identifying whether or not their feelings about money are accurate. If a person regularly worries about not having enough savings because they genuinely lack savings, then their worry doesn't suggest money dysmorphia. However, if a person worries about not having enough savings while having a higher than average amount in their bank account, their worries may be unrealistic.

Learning about average salaries and savings can help people determine if they really are as far behind in terms of personal finance as they feel. For example, individuals in the UK can look at data from the Office for National Statistics. It indicates that, as of April 2024, the median weekly income for full-time workers in the UK was £728, and the median weekly income for part-time workers was £263. According to the Financial Conduct Authority, the average savings in the UK is £17,365, though that figure obscures that about one-third of UK adults have either no savings or less than £1,000 in savings.

How money dysmorphia impacts finances

If you struggle with money dysmorphia, money-related worries may negatively impact your financial habits. In turn, these negative impacts could fuel a feeling of scarcity or lack and increase your money worries. For example, if you feel "behind" financially, you may make unwise purchases so you can look and feel like you have more wealth than you actually do. In the attempt to help yourself "keep up" with others through purchasing, you may worsen your financial situation by not saving or paying off as much debt as you otherwise would.

Although researchers haven't yet focused much on money dysmorphia specifically, there is a significant body of research regarding how mental health can impact finances and vice versa. For example, many studies have suggested that having a low income or living in poverty negatively impacts mental health—potentially even causing trauma—and that poor mental health can also worsen a person's financial situation. This type of situation is called a bidirectional relationship, and it can lead to a self-perpetuating problem.

Tips for avoiding personal finance problems when you have money dysmorphia

One of the biggest risks that can come with money dysmorphia is acting irrationally with your money because of the strength of your emotions surrounding it. Here are a few tips that may help you approach your finances in a more rational, emotionally removed manner.

Delay emotionally driven personal finance decisions

When you sense that you're about to make a money decision rooted in emotion, it may help to pause. Give yourself a set amount of time—maybe 24 hours, maybe a full week—to reflect and sit with the idea of what you're about to do before taking action.

For example, if you open Instagram and see that a friend or coworker is lounging by a pool while on vacation in Santorini, you may feel "behind" and have a sudden urge to book your own envy-inducing trip to help yourself feel better. In this case, you might take a deep breath, journal, talk to close friends, and look closely at your finances. Then, after some time and those strong emotions have passed, ask yourself if a pricey trip is actually a good choice right now.

Booking a big vacation is just one example of the larger financial decisions you may want to avoid making in the heat of an emotional moment. Give yourself time before withdrawing a sizable amount from savings, purchasing property, buying high-end electronics, buying a new vehicle, or making major changes to your investments. Ask yourself why you want to make the decision, conduct research to identify if the action is likely to help or to hurt your overall financial picture, and wait a while before moving forward.

Create a plan for your finances

Creating a game plan for your finances can help keep you on track and give you a way to evaluate money-related whims. The backbone of a financial game plan is typically a budget based on your income, expenses, and goals related to savings, retirement, and future spending, such as on a home or vehicle. If you don't feel confident creating a budget on your own, you may want to turn to a financial advisor or to expert advice shared in reputable courses, workshops, books, articles, or videos.

Once you have a reasonable budget in place, you can review it whenever you notice yourself wanting to make a major financial decision. Checking your budget before making any big financial moves can help you identify if the actions you feel inclined to take are simply passing whims rooted in money anxiety or if they align with your goals and vision for your financial future.

Spend less time on social media 

Many people who struggle with money dysmorphia are thought to be influenced by what they see on social media. Do you follow any celebrities or wealthy influencers on social media? Seeing people who wear designer clothes, drive luxury cars, and own mansions might influence what you consider to be normal in terms of wealth. 

Celebrities and influencers aren't the only accounts on social media that might fuel your money dysmorphia. Advertisements may also influence you to desire items that you can't afford and don't actually need. Even the lifestyles portrayed by friends, family, coworkers, and other connections might distort your view of financial norms. Keep in mind that people on social media typically post the highlight reels of life and might not mention their own flaws and struggles. That friend with a brand-new car or family member who is always taking vacations could be deeply in debt themselves.

Find healthy ways to reduce money stress

The American Psychological Association urges people who experience financial stress to evaluate how they cope with that stress. If you cope with your money unease by buying things you can't afford, eating excessively, turning to addictive substances, or engaging in other unhealthy practices, changing your habits may be a top priority. 

Consider what healthier options you have for managing this stress. Perhaps exercising, calling a friend, or crafting might help you relax when money worries arise. Some people may also benefit from professional support, whether from a mental health counselor or certified financial therapist.

Mental health and money

Although money dysmorphia isn't a mental illness, psychological distress about money could lead to mental health challenges. Research suggests that financial worries are often associated with psychological distress, and psychological distress is associated with potential impacts on mental, physical, and social health.

Instead of self-diagnosing a mental health condition online, consider seeing a professional to determine if you might benefit from mental health treatment. Treatment can often improve a person's mental health, whether they have an official diagnosis or not.

Exploring online therapy

Online therapy, or remote therapy, is one option for receiving mental health help. Online therapy sessions can occur through video call, phone call, and/or in-app messaging rather than in-person. Many people find online therapy to be more convenient because they can attend sessions from anywhere with an internet connection. For people concerned about money, online therapy could be attractive for another reason: Virtual sessions are often more cost-effective than in-person sessions without insurance, and they don’t require the individual to spend money to commute back and forth.

What the research says about online therapy

Researchers haven't yet studied the effect of online therapy on money dysmorphia specifically. However, studies have been conducted on how online therapy helps treat people with generalized anxiety, which is characterized by a persistent sense of worry. A meta-analysis of 10 studies suggests that online cognitive behavioral therapy (CBT) can effectively treat generalized anxiety disorder, with effects similar to those seen in face-to-face therapy.