Are you an overspender or excessive saver? You might have ‘money dysmorphia'

Independent

6 days ago

Many people will recognise the feeling of scrolling through someone else's social media feed, observing their lavish lifestyle and wishing they had the same.
This common experience, driven by the pressure to 'keep up with the Joneses', can distort our financial reality - known as 'money dysmorphia'.
It manifests as a skewed perception of one's own wealth, leading to intense anxiety, guilt, and stress around spending and saving.
Understanding its contributing factors is crucial for developing practical strategies to manage and overcome it.
What is 'money dysmorphia'?
'Money dysmorphia is effectively when the distorted perception of one's financial health, how you feel about your money, doesn't necessarily reflect the reality,' says Matthew Parden, CEO of money management app Marygold & Co. 'This can be emotionally driven, shaped by irregular patterns or social pressures to keep up.'
Money dysmorphia can lead to both overspending and excessive saving, depending on the individual's perception.
'We've worked with anxious savers, avoidant savers and people who like to spend, so there's lots of different types of personality and money dysmorphia can manifest in all of them,' says Parden.
What are some signs or red flags that someone might be experiencing money dysmorphia?
'Feeling uncertain or anxious about money, even though there is no apparent or immediate shortfall in money, could be a sign of money dysmorphia,' highlights Parden. 'It could be that you avoid checking your bank statements or balances and this could be because of stress, or it could be because of a fear of what you might see in there.
'Another sign could be fluctuating between periods where you're spending a lot and reining it back and spending a little, so you kind of vacillate between overspending and underspending. Money dysmorphia could be when you are playing down your success, payments or debts and you feel that you've fallen short, that what you have isn't not enough – even though it might be sufficient.'
What role does social media and societal pressures play in fuelling money dysmorphia?
Social media and societal pressures can contribute to feelings of inadequacy when it comes to personal finances.
'Social media presents a curated version of life, where people are only showing the best side of financial life without providing the context,' says Parden. 'You don't see the debt, the lack of savings, the stress – that is all hidden.'It does kind of amplify these 'norms' and create unrealistic expectations. It provokes spending which is really emotionally driven and creates a constant pressure to keep up, so that even if your financial footing is secure, you still feel that you've got some way to go. And that in itself can lead to insecurity and a distorted sense of your own financial situation and reality.'
Can money dysmorphia be tied to past financial trauma or upbringing?
'If you've grown up in a financially unstable environment or been through times of poverty or crisis or scarcity, that can often make people carry fear and shame around money,' reflects Parden. 'Those experiences can drive/ impact many things in your life around behaviour and emotions, and money is just one of the areas where that might manifest itself.'
What consequences can money dysmorphia have?
'Money dysmorphia can often make people avoid getting involved with money and that means they are avoiding financial planning and organisation of their financial life,' says Parden.'This can lead to missed opportunities like having a safety net reserve of cash.
'You don't have any savings because you are constantly spending, you may feel like you haven't ever got enough and will consistently avoid doing it. That in itself can lead to anxiety, a sense of failure and can affect your mental and physical health.'
How can someone begin to overcome money dysmorphia?
Ignorance is not always bliss, especially when it comes to finances. So, be proactive and start engaging with your finances.
'Take a step back and work out what it is that may be impacting your relationship with money,' advises Parden. 'Just start with small, repeatable steps, like taking 10 minutes out of every week to look at your finances and understand what you're doing and where your money has gone and what is coming up.
'If you recognise an issue there, try not to judge yourself. Just do regular gentle reviews of your finances because that helps you start to engage with it and might help reduce the fear. It might also help you move towards bridging that gap between how you feel about your finances and actually what is true in your finances.'
There are also lots of apps available that can give you a good overview of your financial life.
'If you begin to understand your finances from a behavioural aspect, that could help you identify emotional triggers that cause you to spend or save,' says Parden. 'Apps can also help you to not spend or withdraw. On the Marygold & Co app you can set a time lock and other apps have similar tools that can put a bit of friction on your spending before you make payments.'
What are the benefits of having a clearer, healthier financial mindset?
'If you have a positive financial mindset and the tools, it gives you the ability to actually start saving for those things which are going to help you in your financial life, like building up cash reserves,' says Parden. 'Creating a financial plan will also help you meet your short-term and long-term objectives, whether it's saving for a wedding or for a holiday. Just engaging with your finances can have tremendous long-term benefits.'