Hannah Dawn, 36, was reckless with money in her early twenties. She feared checking her bank account and would put it off as much as possible, only glancing after payday and before she had to pay her bills. Now in her thirties and currently living in Chile, she has savings and is more financially responsible. But that fear has never gone away.
“I still avoid checking my balance,” Dawn says. When she does, she feels a physical shift – her body gets tense and her heart pounds, “even when I know there’s money in there,” she adds.
Dawn thinks about money obsessively, constantly totaling up her earnings for the month, thinking about big expenses coming up, questioning whether she should open a new savings or retirement account. Hannah is one of a growing number of Gen Zers and millennials who are suffering from money dysmorphia.
“Money dysmorphia thrives on ambiguity regarding how much we ‘should have’ saved at any given age.”
“Money dysmorphia occurs any time what you see in your bank account, and how you perceive it differs from objective reality,” explains Kelly Goldsmith, PhD, a professor of marketing at the Owen Graduate School of Management at Vanderbilt University. A recent study by Credit Karma found that 43 percent of Gen Z and 41 percent of millennials experience a distorted perception of their finances. Almost 40 percent of those surveyed who admitted to grappling with money dysmorphia reported having savings exceeding $10,000, and 23 percent of them had savings surpassing $30,000. This is notably higher than the median savings account balance in the US, as noted by Credit Karma, which stands slightly above $5,000.
“Money dysmorphia thrives on ambiguity regarding how much we ‘should have’ saved at any given age, considering our lifestyle and projected expenses,” Goldsmith explains. “This is very hard to assess, and as a result, we often look to reference points, or standards of comparison, around us to judge if what we have is too little or too much.”
The fact that so many young Americans are experiencing money dysmorphia might seem strange, but it actually makes a lot of sense. For those under 40, accumulating wealth has been an uphill battle, one driven by historic housing unaffordability, multiple financial crises, daunting student loan debt, stagnant minimum wages amid record-high inflation, and soaring childcare expenses. According to Credit Karma, 69 percent of respondents who experience money dysmorphia express doubts about ever achieving wealth, while a staggering 95 percent admit that their fixation negatively affects their financial situation.
“I would say I am quite obsessed with saving money and increasingly worried about the future,” Dawn says. Some of her common worries include whether she’ll ever own her own home and be able to retire comfortably, and what her next tax bill might look like. “I often panic in shops in case my card is declined, even when I know full well I have sufficient funds,” she says.
The sense of being financially secure is becoming increasingly elusive, regardless of one’s income level. Lola Méndez, 34, used to survive on less than $2 a day as a student in NYC; she attended college on a mix of grants and scholarships. She’d buy cooking ingredients from the dollar store, order dollar pizza slices, and attend events where there would be free food to make her money stretch as far as possible.
“I survived, but I often feel I still operate in that mindset,” she explains. Now, working as a travel writer, she has months where she makes up to $12,000 from lucrative writing gigs. But while she has more savings, she says, “I still struggle to feel financially stable as my savings feel like they’re for my life, not for right now.”
A financial mindset driven by fear rather than reality isn’t a new concept. Those with grandparents from the Greatest Generation can identify with the scarcity mentality born out of the Depression era. To a large extent, this mindset isn’t entirely our fault. We inhabit a consumer-driven economy that incessantly preaches the mantra of more is better, whether that be money in the bank or stuff in our homes.
What’s more, social media has reinvented the concept of “keeping up with the Joneses.” Exposure to idealized lifestyles online has left many, particularly young adults, grappling with feelings of financial inadequacy, regardless of their actual financial status.
“I am constantly aware of how little money I have compared to some of my friends.”
According to an Edelman Financial Engines study, approximately one-quarter of consumers experience decreased satisfaction with their financial standing due to social media. This pressure can push some to the other side of money dysmorphia, in which people spend beyond their means to try to match the lifestyle of people they see online or in their peer groups.
Olivia Jenkins, 25 and based in New York, lives mostly paycheck to paycheck with no savings. She has $15,000 in student loans and over $2,000 in credit card debt. “There have been several times when I’ve had $100 in the account and it is still two weeks until payday,” she says.
Still, she often finds herself pushing the boundaries of how much she can spend before she actually hits the red. “I am constantly aware of how little money I have compared to some of my friends. I end up playing it off as a joke saying something like, ‘I have $7 to my name right now.'” While Jenkins will often look at her low bank balance and continue spending to keep up with her friends despite how little is in there, at other times, that’s simply not possible. “It does make me feel bad when I have to turn down plans because I can’t afford to go out to eat or on a trip.”
Money dysmorphia, when left unchecked, can create real problems, prompting some to make poor or ill-informed financial decisions. Gen Z, in particular, is accumulating more credit card debt compared to earlier generations, according to Credit Karma. The average total debt for a Gen Zer from October to December in 2022 was $16,283, and jumped to $19,441 over the same time period a year later – the highest percent change among all generations.
However, money dysmorphia can also be a force for good when approached in the right way. “If you feel like you don’t have enough, don’t just sit there and feel bad, strategize around how you can get more,” Goldsmith says. “Your long-term financial health is important, and if your dysmorphia gets you to prioritize it, that can be a good thing.”
Such is the case for Dawn. “It’s a bit like having someone responsible, but a little scary, next to me asking me if I really need to buy that item or urging me to check my balance,” she says. “It’s neither positive nor negative, I suppose, but it’s always there.”
Eve Upton-Clark is a New York-based freelance features writer from London covering culture and society. In addition to PS, her work has featured in Business Insider, The Telegraph, Dazed, i-D, Refinery29, and more.
