"Unlocking Financial Wellness: Understanding and Overcoming Money Dysmorphia"
- youthforceau
- Apr 8, 2024
- 4 min read
There is one phrase that I keep seeing slipping into the personal finance vernacular, and I knew I had to get to the bottom of it. “Money Dysmorphia”. Let’s be frank, it sounds a bit ridiculous, like an excuse us Gen Z’s would make to get out of work. “Sorry boss, I can’t come in today I have cough cough “Money Dysmorphia”.
Curious to understand, I did some more digging and opened my mind up to this concept. I realised, that not only is this a legitimate concept, it is a concept that has been present in my own life more than a handful of times - I have just never been able to give it a name, and I’m sure it is present in yours.
Source, Deposit Photos
So What Is Money Dysmorphia?
Just as body dysmorphia distorts one's perception of their physical appearance, money dysmorphia distorts one's perception of wealth, income, and financial status. So simply put, your perceived financial situation does not match up to the reality of your financial situation.
Think about that friend who reels in the bank at their corporate job; but can never seem to shut their pie-hole up about how expensive everything is, and you best believe they will not be shouting you a coffee at your catch-up.
Money Dysmorphia also plays out in the reverse, as your friend who barely makes $500 a week is shouting drinks left right and centre, whilst of course rocking the newest Vicky Woods Corset, another distorted view of their financial standing.
As peculiar as these situations of “money dysmorphia” are we cannot blame our mates. We can only blame what is referred to as their ‘Money Story’. Alright here we go again, another over-emotional Gen Z getting too deep about topics that shouldn’t be too deep.
Believe me, even you Boomer Paul have a ‘Money Story’.
Essentially your Money Story, or as some experts refer to it your Money Script, is the impact your childhood had on your core memories of money. It is whether your parents fought when the other spent too much on groceries, or if there was never a conversation about expenses of basic items. It is the comments made by other people around you about the ‘snobby upper class’ and people who are ‘too rich for their own good’, or the reinforced belief that you just ‘can’t afford it’.
To understand your own Money Story - ask yourself these questions.
1. What was the atmosphere surrounding money like in your childhood home?
2. How was the attitude towards spending money perceived?
3. What sentiments were associated with saving money in your household?
4. What was the attitude towards charitable giving and sharing money?
5. Can you recall your earliest memory involving money?
6. What specific beliefs or values about money did your mother convey to you?
7. What teachings or beliefs about money were instilled in you by your father?
8. Do you recall any instances of your parents discussing or arguing about finances?
9. In comparison to your peers, did you have more, less, or similar financial resources while growing up?
These reinforced comments and actions that you have unpacked can create a scarcity mentality, a concept that is far from new. In some situations, this concept can be helpful, in protecting individuals from making risky financial decisions.
What's the big deal then?
The problem with it is that it distorts the reality of those whose experiences reflect stability and not scarcity.
For those on the scarcity side of this spectrum, money dysmorphia is disabling them from creating wealth. Estate lawyer and founder of the Family Wealth Planning Institute, Ali Katz, said that this distorted view of money has led her clients to believe they are not wealthy enough to even make important plans for their assets, which she said is simply “a right of passage and not dependent on wealth”. This sense of self-sabotage spills over into the investment world, as both young and old people believe investing is something reserved for the wealthy, therefore they don’t bother learning, understanding or entering the investment world.
The effects of money dysmorphia terminate wealth construction, and with 43% of Gen Z’s and 41% of Millenials admitting they suffer from such a disease - we need to introduce a pathway to challenge these mindsets.
Identifying your Money Dysmorphia & How To Re-write it
So to put it in a basic formula. The opposition of your Money Story + Your current
financial reality = Money Dysmorphia.
As this is a psychological condition, some experts recommend seeking the help of a financial therapist (yes- this exists!). However, if that caused an eye-roll we have brought financial therapist, Bryan Podvin, to you as he recommends this practical first step.
“Take a piece of paper. On one end, write down your goals: Where do you want to be financially? On the other end of the paper, write down where you are now. Now, your task is to bridge the gap between these two points. Create a timeline: What different goalposts will help you connect these dots? For instance, say you want to save $5,000 in an emergency fund. Your closest goalpost may be to save $50, then $100, and so on. On top of these goals, what behaviours do you need to implement to save those amounts? Maybe it’s ordering fewer Ubers, or learning how to meal prep.?"
Other key strategies include;
Track your spending in detail
Automate saving and investing
Cancel unnecessary expenses
Avoid Social comparison
Celebrate financial wins
We know this is just the beginning of this conversation, and we are excited for you to join us as we continue to explore the evolving landscape of personal finance and uncover the profound impact of our money stories on our everyday actions.
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