What is "money dysmorphia" & how do I manage it?

Ever felt guilty or anxious about spending money, even when you can afford it? Or maybe you spend a lot but avoid checking your bank account?

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If you said yes, you might be dealing with what's called money dysmorphia.

So, let's explore what's going on and what you can do to build a healthier relationship with your cash!

Money dysmorphia happens when there's a gap between what you think your financial situation is and what it actually is.

Even if you’re doing fine with money, you might feel anxious, guilty, stressed, insecure, confused, and/or afraid about spending or saving because your perception of your finances is off.

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Now, there are two common types of people with money dysmorphia:

1. Someone who saves a lot but feels it's never enough, so they don't enjoy their money.

2. Someone who overspends but refuses to accept their financial reality.

Four people are dealing with their finances differently:

Ravi has a well-thought-out budget and sticks to it. He has an emergency fund but also spends on fun things without feeling guilty.

Luca loves spending his money on fun things. He doesn't have a lot in savings and skips budgeting. He believes things will work out for him financially no matter what.

Sofia has a good job that gives her enough money but she stresses about spending. She's scared of running out, so she checks her bank account a lot and doesn't buy many things.

Mei lives paycheck to paycheck and keeps a strict budget. She tracks every expense, buys what she needs, and rarely buys extra for herself.

What causes money dysmorphia?

So, you have an unhealthy relationship and mindset around money...what caused it? Why does it happen?

• Social comparison: comparing yourself to others on social media can make you feel like you're not doing or earning enough, even if you're financially okay.

• Scarcity mindset: money struggles growing up could lead to feeling inadequate. Even when you're financially comfortable, fear can set in, leading to saving every dime or holding onto money tightly.

• Generational stress: If you're a Millenial or a Gen Z, you'll likely face higher living costs and fewer economic opportunities, leading to more money stress.

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How does it impact your life?

• You're constantly stressed about money.

• You feel guilty about buying things.

• You don't enjoy what you've earned.

• You compare yourself to others' financial situations.

If you're experiencing money dysmorphia, here are 5 strategies for you to try!

#1. Reflect and learn

Be honest with your habits and be open to learning more to make better decisions about your financial future.

• Reflect on how you use money and what feelings are associated with your habits.

• Set aside 10 minutes/day to learn about personal finance basics.

• Take courses offered by The Financial Consumer Agency of Canada or Coursera.

#2. Take a break from social media

• Limit social media or screen time using productivity apps like ScreenZen or Forest.

• Use the mute feature to limit someone's post on your feed without unfollowing them.

• Try a "digital detox" for a weekend.

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#3. Set financial goals

• Use the SMART goal framework to help you set measurable financial goals that reflect what you want and your reality.

• Break down long-term goals into smaller milestones (i.e., buy a house by age 30 > yearly and monthly savings targets).

#4. Track your spending

• Use free budget templates like Google Sheet's Budget Template to help you write down your expenses and income every day.

• Ask yourself: "How would this improve my financial situation?" or "What are the 3 expenses I could cut out?"

#5. Get professional help

• Look at social services agencies in your area (i.e. Woodgreen in Toronto or the Consumer Financial Protection Bureau in the US) that offer free finance clinics, resources, or 1:1 money coaching.

• Talk to a financial advisor from your bank.

You recently received a large bonus at work and decided to save most of it. But even though you have enough to pay for all your needs, you still feel anxious about spending any of it. You constantly check your bank account and avoid spending on things you enjoy.

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What is the best course of action?

A. Continue saving all of your money.

B. Stop saving and spend on things you enjoy without limits.

C. Recognize your feelings about money and seek professional help.

D. Stop tracking your finances and live in the moment.

Managing money dysmorphia is about balancing saving for the future and enjoying the present without feeling guilty or anxious about overspending. You don't need to let money dysmorphia control your life.

You can feel financially secure without obsessing over every dollar.

So, take control of your money mindset today!