Nowadays, money is a measure of how people see themselves and measure success.
However, most people’s perception of money is rarely rooted in reality. Instead, it might be shaped by cultural expectations, past experiences, and comparisons. Below, we explore the psychological side of money, helping people have a better relationship with money.
What is money dysmorphia?
Money dysmorphia is a common term used to describe a warped perception of one’s financial reality. It’s similar to how body dysmorphia involves one’s distorted view of their physical appearance. Most people with money dysmorphia tend to often:
Ignore or undervalue their financial achievements
Obsess over status symbols and financial goals
Compare their finances to others frequently and feel inadequate
Feel poor despite being wealthy or financially stable
Experience guilt of spending
While money dysmorphia isn’t an official medical diagnosis, it’s an evolving concept in mental health and financial psychology discussions. Its roots can be traced back to:
- Money-related trauma
- Childhood financial insecurity
- Familiar or cultural pressure for financial success
- Social media comparisons
Managing Money Dysmorphia
While managing money dysmorphia can be emotionally challenging, it’s possible to succeed with the right strategies and awareness.
When left unchecked, money dysmorphia has various impacts like poor life satisfaction, strained relationships, stress, and burnout. Below we take a look at a few practical financial planning strategies and psychological tools for managing money dysmorphia.
Acknowledgement and Awareness
The first step to managing money dysmorphia is recognizing the symptoms, which could include feeling poor despite being financially stable, feeling guilty when spending, and obsessing over money. After identifying the symptoms, one should write down their emotional responses to money and financial beliefs to better identify the patterns.
Assess the Financial Situation
After acknowledgement, one should proceed to better understanding their financial situation.
This helps create a clear snapshot of the income, debts, expenses, and investments. There are a variety of tools like Spreadsheets that one can use to objectively track their finances.
Set Realistic Financial Goals
Understanding one’s financial situation helps them better focus on their financial goals. To better start the process, consider a few things that are controllable. Such include paying off one debt, saving for a vacation, and building a 3-month emergency fund. Doing this allows one to break down larger goals into small wins, making the progress easier to celebrate.
Financial Counseling or Therapy
In addition to better understanding one’s finances and setting financial goals, it’s also advisable to seek financial therapy when managing money dysmorphia. Speaking with a financial therapist can help bridge the gap between emotions and money.
It can also help uncover root causes, thus helping reframe unhealthy money habits and beliefs.
Practice Financial Mindfulness
Every week, one should write down something they’re grateful for financially. They can also write a financial win, no matter how small it is. Practicing these strategies helps shift focus from there’s “never enough” to “something’s happening”. In addition, one can consider using Cognitive Behavioral Therapy (CBT) techniques in challenging irrational money thoughts.
Therefore, instead of thinking one is failing financially, they can focus on the plans they have and the progress being made.
