Latest news with #NickCharalambous
RTÉ News
04-08-2025
- Business
- RTÉ News
Cash stuffing: The old-school budget trend returns
This method involves dividing physical cash into labelled envelopes, or budgeting binders, for specific expenses. Swipe, tap, spend - repeat. In a world where money disappears with a click, a surprisingly old-school budgeting trend is making a major comeback - cash stuffing. Made popular on platforms like TikTok and Instagram, this method involves dividing physical cash into labelled envelopes or budgeting binders for specific expenses. What started as a niche personal finance hack has exploded into a movement, especially among Gen Z and millennials looking to regain control of their spending in a world of instant transactions. How does cash stuffing work? Cash stuffing is a modern take on the old school envelope system, a simple yet effective method where you withdraw cash and divide it into separate envelopes labelled by spending category - such as rent, groceries, or entertainment. "At the start of each week or month, you decide how much money you want to spend in each area," explained Nick Charalambous, Managing Director of financial advisory firm Alpha Wealth. "Then, you withdraw that amount in euro and "stuff" it into the corresponding envelope. "The golden rule? Once the money in an envelope is gone, you stop spending in that category until the next budgeting cycle," he said. While many people rely on digital tools like budgeting apps or spreadsheets, cash stuffing appeals to those who want to see and feel their money. "For some, tapping a card or checking an app balance can feel abstract or easy to ignore," Mr Charalambous said. "But when you open your groceries envelope and see €40 left, you know exactly what you can afford at the supermarket and you're far less likely to overspend." While this method has long been used by older generations, it has recently struck a chord with younger people in Ireland who are feeling the pressure of the rising cost of living. What are the benefits of cash stuffing? There are plenty of reasons people love cash stuffing and for many, it just works. "I recently overheard a woman in a supermarket say she always brings a set amount of cash on holidays so she doesn't overspend," Mr Charalambous said. "That's the beauty of this method - it puts real, tangible limits on your spending." For anyone who finds themselves a bit "tap happy" on a night out or during an online shopping scroll, cash stuffing acts as a simple but effective safeguard. "When the money is gone, it's gone. No overdrafts. No unexpected bills. "Cash stuffing is best for those who have a hard time controlling their spending, have a lot of debt or frequently find themselves buying things on impulse," he added. What are the main disadvantages? Like any budgeting method, cash stuffing isn't without its drawbacks. While it offers structure and control, it also comes with limitations, especially in today's increasingly digital world. For example, it lacks flexibility. "If an unexpected expense comes up, you might find yourself short in one category and unable to reallocate funds easily," Mr Charalambous warned. "It's also, by nature an old-school method, one that doesn't always align with the way we shop and pay for things today. "Digital wallets and banking apps allow instant transfers and easier access to your money when you need it," he added. While deposit rates are relatively low, keeping money in the right accounts can help you earn interest, something cash in an envelope simply won't do. Also, from a safety perspective, carrying or storing large amounts of physical cash isn't ideal. Is cash stuffing the same as the old-school envelope system? Pretty much. Cash stuffing is essentially a modern rebrand of a budgeting technique that previous generations swore by. "It mirrors the traditional "envelope system" many households used long before contactless payments and budgeting apps," Mr Charalambous said. "Think of your parents or grandparents setting aside envelopes for the bin man, gas man, rent or the childminder - each one holding a set amount of cash for specific weekly or monthly expenses. "What's old is new again and with the added flair of TikTok tutorials and colourful budget binders, cash stuffing is enjoying a 21st century revival," he added. Is TikTok shaping our financial habits? Social media is having a significant impact on how people, especially younger generations, approach their finances. Platforms like TikTok and Instagram have become go to sources for financial tips and trends. The rise of cash stuffing is a perfect example. It has gained massive traction online amassing over 3 billion views collectively on TikTok alone. Rather than turning to traditional financial institutions, many Gen Z and millennials are looking to relatable influencers for practical, bite sized advice. How do I get started? If you're curious about cash stuffing and want to give it a go, the good news is it's easy to start and doesn't require anything more than some cash, envelopes and a bit of discipline. We asked financial advisory firm Alpha Wealth for their top tips to help you get going. 1. Create a financial budget Before stuffing a single envelope, take a look at your recent bank and credit card statements. Categorise your expenses - groceries, rent/mortgage, utilities, socialising, etc. and total how much you've been spending in each area over the last few months. This will give you a realistic starting point for setting limits. Use the 50/30/20 rule: 50% for needs (rent, utilities, groceries) 30% for wants (dining out, entertainment) 20% for savings or debt repayments 2. Set spending limits by category Decide how much cash you want to allocate to each category. If you're hoping to save more, identify areas where you can cut back - even €10 or €20 can add up. For categories with more frequent spending, like groceries or petrol, consider weekly limits to avoid blowing your budget early in the month. 3. Create your envelopes or budget binder This is the fun part. You can use plain envelopes, colour-coded folders, or buy a budget binder with labelled wallet inserts - popular on TikTok and ideal if you're on the go. Whatever you choose, the key is to clearly mark each one with its category. If you don't feel comfortable carrying cash, keep your envelopes at home in a secure place. 4. Withdraw your cash and stuff the envelopes Once you've finalised your limits, calculate the total cash you'll need for the week or month. Withdraw that amount, sort it into piles, and stuff your envelopes accordingly. 5. Only spend what's in the Envelope Discipline is key. When making a purchase, use the relevant envelope. If the money runs out, that's it until the next cycle. Avoid topping up from other envelopes or reverting to your debit or credit card unless it's absolutely necessary. If you keep running out too early in certain categories, reassess your spending patterns or consider adjusting your limits. 6. Save your surplus If you come in under budget and have leftover cash at the end of the month, instead of rolling it into next month's spending, consider using it to pay down debt or add it to a savings account with interest. Over time, these small wins can help you build towards bigger goals like holidays. 7. Start small
RTÉ News
04-08-2025
- Business
- RTÉ News
Cash stuffing: The old-school budget trend returns
Swipe, tap, spend - repeat. In a world where money disappears with a click, a surprisingly old-school budgeting trend is making a major comeback - cash stuffing. Made popular on platforms like TikTok and Instagram, this method involves dividing physical cash into labelled envelopes or budgeting binders for specific expenses. What started as a niche personal finance hack has exploded into a movement, especially among Gen Z and millennials looking to regain control of their spending in a world of instant transactions. How does cash stuffing work? Cash stuffing is a modern take on the old school envelope system, a simple yet effective method where you withdraw cash and divide it into separate envelopes labelled by spending category - such as rent, groceries, or entertainment. "At the start of each week or month, you decide how much money you want to spend in each area," explained Nick Charalambous, Managing Director of financial advisory firm Alpha Wealth. "Then, you withdraw that amount in euro and "stuff" it into the corresponding envelope. "The golden rule? Once the money in an envelope is gone, you stop spending in that category until the next budgeting cycle," he said. While many people rely on digital tools like budgeting apps or spreadsheets, cash stuffing appeals to those who want to see and feel their money. "For some, tapping a card or checking an app balance can feel abstract or easy to ignore," Mr Charalambous said. "But when you open your groceries envelope and see €40 left, you know exactly what you can afford at the supermarket and you're far less likely to overspend." While this method has long been used by older generations, it has recently struck a chord with younger people in Ireland who are feeling the pressure of the rising cost of living. What are the benefits of cash stuffing? There are plenty of reasons people love cash stuffing and for many, it just works. "I recently overheard a woman in a supermarket say she always brings a set amount of cash on holidays so she doesn't overspend," Mr Charalambous said. "That's the beauty of this method - it puts real, tangible limits on your spending." For anyone who finds themselves a bit "tap happy" on a night out or during an online shopping scroll, cash stuffing acts as a simple but effective safeguard. "When the money is gone, it's gone. No overdrafts. No unexpected bills. "Cash stuffing is best for those who have a hard time controlling their spending, have a lot of debt or frequently find themselves buying things on impulse," he added. What are the main disadvantages? Like any budgeting method, cash stuffing isn't without its drawbacks. While it offers structure and control, it also comes with limitations, especially in today's increasingly digital world. For example, it lacks flexibility. "If an unexpected expense comes up, you might find yourself short in one category and unable to reallocate funds easily," Mr Charalambous warned. "It's also, by nature an old-school method, one that doesn't always align with the way we shop and pay for things today. "Digital wallets and banking apps allow instant transfers and easier access to your money when you need it," he added. While deposit rates are relatively low, keeping money in the right accounts can help you earn interest, something cash in an envelope simply won't do. Also, from a safety perspective, carrying or storing large amounts of physical cash isn't ideal. Is cash stuffing the same as the old-school envelope system? Pretty much. Cash stuffing is essentially a modern rebrand of a budgeting technique that previous generations swore by. "It mirrors the traditional "envelope system" many households used long before contactless payments and budgeting apps," Mr Charalambous said. "Think of your parents or grandparents setting aside envelopes for the bin man, gas man, rent or the childminder - each one holding a set amount of cash for specific weekly or monthly expenses. "What's old is new again and with the added flair of TikTok tutorials and colourful budget binders, cash stuffing is enjoying a 21st century revival," he added. Is TikTok shaping our financial habits? Social media is having a significant impact on how people, especially younger generations, approach their finances. Platforms like TikTok and Instagram have become go to sources for financial tips and trends. The rise of cash stuffing is a perfect example. It has gained massive traction online amassing over 3 billion views collectively on TikTok alone. Rather than turning to traditional financial institutions, many Gen Z and millennials are looking to relatable influencers for practical, bite sized advice. How do I get started? If you're curious about cash stuffing and want to give it a go, the good news is it's easy to start and doesn't require anything more than some cash, envelopes and a bit of discipline. We asked financial advisory firm Alpha Wealth for their top tips to help you get going. 1. Create a financial budget Before stuffing a single envelope, take a look at your recent bank and credit card statements. Categorise your expenses - groceries, rent/mortgage, utilities, socialising, etc. and total how much you've been spending in each area over the last few months. This will give you a realistic starting point for setting limits. Use the 50/30/20 rule: 50% for needs (rent, utilities, groceries) 30% for wants (dining out, entertainment) 20% for savings or debt repayments 2. Set spending limits by category Decide how much cash you want to allocate to each category. If you're hoping to save more, identify areas where you can cut back - even €10 or €20 can add up. For categories with more frequent spending, like groceries or petrol, consider weekly limits to avoid blowing your budget early in the month. 3. Create your envelopes or budget binder This is the fun part. You can use plain envelopes, colour-coded folders, or buy a budget binder with labelled wallet inserts - popular on TikTok and ideal if you're on the go. Whatever you choose, the key is to clearly mark each one with its category. If you don't feel comfortable carrying cash, keep your envelopes at home in a secure place. 4. Withdraw your cash and stuff the envelopes Once you've finalised your limits, calculate the total cash you'll need for the week or month. Withdraw that amount, sort it into piles, and stuff your envelopes accordingly. 5. Only spend what's in the Envelope Discipline is key. When making a purchase, use the relevant envelope. If the money runs out, that's it until the next cycle. Avoid topping up from other envelopes or reverting to your debit or credit card unless it's absolutely necessary. If you keep running out too early in certain categories, reassess your spending patterns or consider adjusting your limits. 6. Save your surplus If you come in under budget and have leftover cash at the end of the month, instead of rolling it into next month's spending, consider using it to pay down debt or add it to a savings account with interest. Over time, these small wins can help you build towards bigger goals like holidays. 7. Start small
Irish Times
25-07-2025
- Business
- Irish Times
How to get children saving early – and why prize bonds aren't the answer
Almost exactly 40 years ago, my well-meaning dad gave me £100 in prize bonds , after which I did what most people do with such a gift – I did absolutely nothing. I still have the prize bonds – or their euro equivalent - and over the last 39 and a bit years, I have earned the princely sum of €50 in prize money in one single win, with absolutely nothing earned in the last 22 years or so. That works out at an annual return of €1.28 on the initial investment but a return of zero since the days of the Celtic Tiger. It could have been so different. READ MORE Had my dear old dad decided to invest the cash in the S&P 500 in New York in my name instead of giving me the prize bonds, the £100 would now be worth more than €5,000. Had he had financial wisdom of the ages and used the cash to buy me a small slice of Apple , a tech company that had set up a base in Cork but was faltering by the middle of the grim 1980s, I'd be sitting on a cash mountain of more than €300,000 and would have no need whatsoever to be writing these words at all. Even if he had just left the cash in a stupidly low-interest rate bank account in Ireland, it would be worth about €350 now and not worth the same as it was the day the bonds were bought – or less than half what it once was – once inflation is factored in. I can't, of course, blame my father. At any point I could have cashed in the prize bonds and taken control of the investments but I didn't. Nor did I do what I might otherwise have done when my first child was born more than 18 years ago. Had I wisely invested the monthly child benefit in a decent investment account starting the month after her birth, the nest egg would now be just under €50,000 assuming an average annual growth of just 5 per cent – a not too shabby return on what would have been a total investment of 30 grand. Like most people, however, I did not save that money and it is long, long gone. If I had invested it – and the prize bond cash – in bitcoin in 2010 I'd be a billionaire by now, probably. But I didn't and I am not. Bitcoin insanity aside, this is all by way of saying saving early and often is the smart thing to do, and the sooner you can get your children into the habit, while also working out the best thing to do with whatever money they have or you have for them, the better off they will be. But the benefits of developing a keen eye for savings are not just about the cold, hard cash. 'As parents, we play a vital role in shaping our children's attitudes toward money,' says the m anaging director of Alpha Wealth Nick Charalambous. 'Often, it's the habits we model at home – how we save, spend and talk about money – that leave the biggest imprint. That's why it's important to instil healthy money behaviours from a young age.' He notes that we may sometimes suggest that an adult who still has their Communion money is on the mean side – or, to be blunt, really tight. – The phrase 'reflects the importance of teaching children balance: between saving, spending and making thoughtful money choices. With many children receiving significant sums from Communions, Confirmations or even early summer jobs, now is the perfect time to consider the best way to guide them toward good financial habits.' [ How can you make your savings work harder? Opens in new window ] Of course, Ireland is no country for savings right now, with interest rates most kindly described as modest, but many banks reserve their best rates for under-18s – offering more than adults receive on standard deposit accounts. AIB has two child-specific savings accounts: the Junior Saver, which is for those aged between 7 and 11, and the Student Saver for those between 12 and 17. These accounts offer 3 per cent interest annually on the first €1,000 – a significant step up from the 0.25 per cent available to adults. Interest is calculated daily and paid twice a year. Accounts are in the child's name (with parental consent), which helps reinforce ownership and responsibility. The children's savings account from the EBS can be opened by an adult on behalf of a child aged up to 12 and pays 2.5 per cent on savings up to €5,000.99. 'This is ideal for kids who have done particularly well from relatives' generosity,' says Charalambous. And again, it is much more competitive than adult equivalents. Revolut and Bunq allow kids to set goals and manage savings in a gamified way. The Revolut account for the under-18s is linked to a parent or guardian's account and has the aim of empowering children to make their pocket money earn money. Bunq offers rates up to 2.01 per cent, depending on the account type. 'These are useful for tech-savvy families – though parents need to hold paid accounts for full access,' says Charalambous. An Post MoneyMate for children aged between 7 and 15 offers no interest but it does give kids digital tools to budget using 'jars' for specific goals. Be mindful of the small monthly fees after the first three months, unless the parent also holds an An Post account. 'While savings accounts are a solid start, they are typically best for short-term goals, like helping kids understand money or save for something they want. But if your aim is to support their future education, help with a house deposit or build a financial cushion, parents should think longer term,' says Charalambous. With current inflation at 1.6 per cent, seeking better returns is key to ensuring better returns on whatever money children might have. Instead of leaving your child's allowance or gift money in a deposit account, parents could look at regular savings plans from insurance providers, which invest in a diversified fund and typically yield higher returns over 10–plus years. These are designed with flexibility and can be tailored to an individual's risk appetite. Starting a savings plan early allows your money to grow exponentially. Compound interest is earned on both the initial amount and the accumulated interest. For example, saving €140 a month from birth can grow significantly over 18 years, with a 4 per cent annual growth yielding €44,807.67 compared with €36,692.14 at a 2 per cent growth rate. [ Warren Buffett's simplest lesson: the power of compounding interest Opens in new window ] 'The best savings plans allow you to pause or adjust contributions as your circumstances change. Look for plans with no exit penalties or restrictive fees,' says Charalambous. Whether it's saving, spending or donating a portion of their gift money, involving children in basic financial decisions is key. A Communion windfall might be their first real encounter with money – a perfect teaching moment. Children's savings accounts are a great way to introduce financial literacy early and some of the rates on offer are among the best in the market. But for parents with a long-term view, combining those accounts with strategic saving or investing can provide far more meaningful support down the line. With rising education and living costs, starting now and being intentional about it, could make all the difference. You can contact us at OnTheMoney@ with personal finance questions you would like to see us address. If you missed last week's newsletter by Dominic Coyle on dealing with unmanageable debt, you can read it here .
Irish Times
04-06-2025
- Business
- Irish Times
Are you living beyond your means? You may have money dysmorphia
Do you have money dysmorphia? If there's a disconnect between how you feel about your financial position and the reality, this may well be you. Money dysmorphia means some people overestimate their wealth, overspending or borrowing to fund the lifestyle they feel they should have. Others underestimate their finances, hoarding savings, but at a cost. Being at either end of this spectrum can leave you short. READ MORE If you can meet the monthly loan repayment on a loan for that new car, big holiday, or the bells-and-whistles wedding, why shouldn't you borrow? If you're funding lifestyle expenses with money that isn't yours while neglecting basic savings or your pension, this can mask a less than glossy situation. 'There can be a disconnect between how people feel about their financial position versus the reality, and this is leading some people to over borrow and overspend,' says Nick Charalambous, managing director of Alpha Wealth. Cars, kitchens and holidays, events – people in the Republic took out a record €2.5 billion in personal loans in 2024. This was a 20 per cent increase in value of borrowings on the year before, according to Banking and Payments Federation Ireland (BPFI) figures, and the highest it's been since 2020. Nick Charalambous managing director of Alpha Wealth Demand for personal loans is largely driven by how well the economy is doing, interest rates and consumer confidence, says the Central Bank. But just because you can borrow doesn't mean you should. 'This surge in borrowing could signal more than just consumer confidence – it may also be a red flag,' says Charalambous. 'This kind of upward trend often reflects deeper financial pressure, or a distorted perception of personal finances,' he says. After the spike in living costs in recent years, some people are dealing with the new reality by increasing personal borrowing rather than cutting their cloth, says Cian Callaghan, private client manager at Metis Ireland. The number of new car loans jumped by more than 29 per cent in the last three months of 2024 compared to the same period the year before. Repaying loans and interest at the expense of building your emergency fund or pension first can stem from a risky presumption that you will always have income, it will always rise, and so the future will take care of itself. If you take out a personal loan, your money is earning money for someone else ... Eschew the purchase and invest the amount instead Not getting these basics right first is something you may pay for down the track. 'Maybe they feel their income will catch up, but if your mindset is: 'I'm going to enjoy the journey first with no clear plan for the future', you will end up just spending everything,' says Callaghan. Not all borrowing is bad or a result of money dysmorphia though. Some loans, like a mortgage or education spending, can help us to progress in important ways. There is an opportunity cost to spending and paying down debt on more discretionary items however – repayments and interest can represent lost growth. [ Summer holiday checklist - 25 ways to 'save not spend' in the days ahead Opens in new window ] If you take out a personal loan, your money is earning money for someone else – namely, the bank, which is charging you interest. Eschew the purchase and invest the amount instead, and your money could be earning money for you. 'If you invest in the global stock market, you could be getting 7 to 10 per cent annualised return,' says Callaghan. 'Or if you put the money into your pension, you are getting tax relief on the way in,' he says. 'The gap between you paying that money out [in personal loan interest] and you investing it through a pension is kind of 15 per cent upwards,' says Callaghan. 'Compound that over the next few decades of your life and it makes a staggering difference.' Borrowing so that you are always driving the 'right' car, for example, comes at a cost, says Charalambous. 'Some electric cars can cost €50,000 to €60,000. If you work out the overall cost of buying it with a car loan, it can be another 50 per cent on top,' says Charalambous. 'And these cars are depreciating, so they need to be updated every three to four years. That's a real expense on your financial budget.' [ Average pay has passed €1,000 a week. The figure offers some key messages about where the economy is and how households are doing Opens in new window ] Even if it's a small loan that you can service, it can come at the cost of using that money more productively towards your long-term financial health. Taking time to zoom out and assess your overall financial position can help you get real, says Callaghan. 'I try to give those only living in the present a view of the next five to 10 years,' he says. 'If you have borrowed the last three times you have changed the car, your goal should be saving enough money so you don't have to borrow the next time,' says Callaghan. 'For people who are finding themselves in that debt trap, if you can afford the repayments on that car, you can afford to save the money in advance to buy it yourself and not have to pay interest on it.' Breaking free from debt: 'I used to see my credit card limit as a target' Listen | 25:54 This will take discipline over time. 'Be intentional about what you are going to save,' he says. 'Automate it, get it out of your bank account within 48 hours. 'That's how you start saving intentionally rather than: 'I have a bit of money left at the end of the month, I'll throw it in a savings account.'' Where there is money dysmorphia in a relationship – where one partner has a much more optimistic view of household finances than the other, speaking to a financial planner together can put you on the same page. 'There is no point in having money in the bank earning zero and then borrowing money at 8 or 9 per cent interest' While for others, money dysmorphia can mean they underestimate their wealth. Rather than spend their cash on needs, they take out a personal loan. They may neglect pension or other investment opportunities that would grow their wealth in favour of an oversized war chest. Inflation in recent years, and now the threat of tariffs and redundancies in some sectors, are increasing for some the drive to batten down the hatches. [ Around 15% of consumers unable to cope with €1,000 financial emergency, survey finds Opens in new window ] This scarcity mindset can lead to hoarding cash and keeping it readily accessible. Cloth cut too tight can come at a cost too. A preference among Irish households for 'shorter-term, more accessible deposit accounts' cost them almost €800 million in unearned interest during 2024, according to Central Bank of Ireland estimates. 'I have clients who have large amounts of cash on deposit. They have, almost, a fear of not having money available,' says Charalambous. 'It's typically at rates of less than one per cent, and yet they borrow money for things like personal contract plan car loans that are costing them seven plus per cent a year, or they have a big balance on a credit card.' 'There is no point in having money in the bank earning zero and then borrowing money at 8 or 9 per cent interest,' says Charalambous. 'That makes it very difficult to reach certain financial objectives like retiring early.' Financial planning can help you figure out the right amount of money to keep in savings, and how much is too much. Six months net expenses on deposit is enough for a rainy day fun, says Callaghan. This means having enough to cover your mortgage, direct debits and usual expenses. 'If your family is spending €5,000 a month, every month, you will need to have €30,000 of a rainy-day fund,' he says. Having this war chest provides self-insurance in case of job loss or illness. 'Once you have an emergency fund and you are contributing to a pension, then I'd be more inclined to say, enjoy the journey along the way' If there are known expenses coming up, you should start to put some money aside for these things too, he says. 'We usually look three years into the future, so if you have definite expenses on the horizon like changing the car or a big holiday that aren't covered by your cash flow, we'd be trying to get that on deposit as well,' he says. 'You want to get anything more than that invested, you want to get it working for you,' says Callaghan. Keeping excess money on deposit can mean you have a more pessimistic view of your finances than is necessary. Once savings are in place, the next best step is to max out pension. Contribute to the threshold for your age to maximise your income tax relief. 'Rather than you being the person paying the interest on a personal loan, you are the person receiving the return,' he says. 'Once you have an emergency fund and you are contributing to a pension, then I'd be more inclined to say, enjoy the journey along the way,' says Callaghan. 'But if your mindset is, I'm going to enjoy the journey first with no clear plan for the future, you will end up just spending everything and borrowing.' If your financial plan is to get through life on a succession of high-cost personal loans, this can be its own kind of money dysmorphia. 'Borrowing can be part of a healthy financial strategy – but only if it's done with clarity and control,' says Charalambous. 'I understand that many people are borrowing to stay afloat or maintain a sense of normality during financially challenging times. But even small changes – like choosing the right repayment method or seeking advice – can make a big difference,' he says. 'Only borrow for needs, not wants. While weddings and holidays are meaningful, so is your long-term financial wellbeing.' Understand interest rates and hidden charges too, particularly on personal contract plans and short-term loans. A 7 per cent loan can cost thousands more over time. With outstanding consumer credit now exceeding €13 billion, people need to take a more informed, intentional approach to borrowing, he says. 'Borrowing needs to be a conscious, informed decision – not an emotional reaction to short-term pressures.'
RTÉ News
25-05-2025
- Business
- RTÉ News
Money dysmorphia: When your mind tricks your wallet
You've got a steady income, a roof over your head, and maybe even some savings - but why does it never feel like enough? Welcome to the age of money dysmorphia - a mindset where your financial reality never quite matches how secure, or insecure you feel. Much like body dysmorphia distorts how people see their physical appearance, money dysmorphia warps an individual's perception of their financial health. Some might feel financially secure because they drive a new car, go on regular holidays, or host lavish events, but in reality, they may be carrying substantial debt, have little savings, and lack long-term financial planning. "At the heart of this is emotional pressure fuelled by social comparison," said Nick Charalambous, Managing Director of financial advisory firm Alpha Wealth. "Platforms like Instagram and TikTok often create unrealistic expectations, where people see polished lifestyles and feel the need to 'keep up' even if that means borrowing to fund it," he said. What problems can money dysmorphia cause? One of the most immediate and damaging consequences of money dysmorphia is its potential to fuel excessive borrowing. People with money dysmorphia may take on debt in an attempt to match the financial image they perceive others have. Here in Ireland, borrowing is on the rise. Figures published just last week show that €2.5 billion worth of personal loans were drawn down last year - a record high. Borrowing isn't inherently bad as it helps people get on the property ladder, invest in education or improve their homes. However, Mr Charalambous said it becomes a problem when it's being used to maintain lifestyles rather than build financial stability. "The issue arises when people borrow without a clear repayment plan or use credit to fund 'wants' instead of 'needs'," he said. "This creates long-term strain that can snowball out of control particularly with high-interest loans or credit card debt." In particular, he warned about the consequences of Personal Contract Purchase finance, known as PCP. "It offers low monthly payments that appear affordable, but often come with a large balloon payment at the end. "Many people roll into new deals without ever owning the asset, essentially renting a lifestyle they can't afford," he said. Is borrowing during global uncertainty wise? Borrowing during times of global uncertainty can be especially risky, as fluctuating interest rates and market volatility can quickly turn manageable debt into a financial burden. In uncertain economic climates - marked by inflation, geopolitical tensions, or recession fears - borrowers may find themselves facing rising repayment costs or reduced income, making it harder to stay afloat. "In uncertain times, caution is key," said Mr Charalambous of Alpha Wealth. "Ireland has low financial literacy levels compared to other European countries and many people are not maximising their savings or investing efficiently," he added. At Alpha Wealth, they see some clients with large sums sitting in low-interest deposit accounts while they take out expensive loans. "If people built better saving habits, they would need to borrow less," he said. Before taking on any new debt, Mr Charalambous encourages clients to ask - "is this a want or a need?" "Weddings, for example, are joyful occasions but spending tens of thousands on one day, while taking out loans to do so, may not be the smartest financial decision," he added. He said it's about making decisions that don't cause you to spend extravagantly beyond your means - which may affect you into the longer-term. How to avoid money dysmorphia? Simply put, don't let your finances be driven by emotion. Everyone has a certain amount of money to work with - Mr Charalambous said it's how you manage it that makes the difference. "Whether you're dealing with debt or unsure where to start, don't bury your head in the sand," he said. Money dysmorphia is a powerful reminder that financial perception does not always align with financial reality. Taking a proactive, informed approach to managing your finances can replace anxiety with confidence and help shift focus from comparison to progress. In uncertain times, the experts say clarity - not emotion - should guide your financial decisions.
