The signs you're one of the young Aussies with 'money dysmorphia' (2024)

Gen Z and millennials are suffering from financial insecurity regardless of whether they're doing well or not, experts have found.

'Money dysmorphia' is a psychological condition whereby a person has a 'distorted view of their own finances that could lead them to make poor decisions'.

Social media and the desire to be rich are the two core reasons leading to a spike in the worrying tend among young people. This in turn results in financial anxiety and stress even if they have thousands saved in the bank.

According to a Credit Karma study, a staggering 43 per cent of Gen Z and 41 per cent of Millennials say they suffer from it.

Helen Baker, a financial advisor and founder of On Your Own Two Feet, told FEMAIL goals are key to breaking the cycle of money dysmorphia, and they also tie into personal values.

What are the signs of money dysmorphia?

Courtney Alev, consumer financial advocate at Credit Karma, said: 'A lot of people are examining their finances and comparing themselves to their peers, people on social media, and even celebrities, which is bringing up feelings of inadequacy.

'This distortion between perception and reality can prevent people from taking steps towards achieving their financial goals.'

Those suffering from money dysmorphia frequently compare their financial situation to others, making them feel behind. The obsession to be rich yet feeling like it's completely out of reach is considered to be another root cause of the problem.

Excessive social media usage doesn't help and only adds fuel to the insecurity, which exacerbates feelings of dissatisfaction with personal finances.

Ms Baker said: 'What we see on social media is the highlight reel of people's lives, it's all a façade, as if you drove past a big house with a BMW out the front.

'We're never shown the entire picture to someone's life. All is not what it seems.'

She added how it's 'unrealistic' and 'unattainable' for an everyday person to compare themselves to a celebrity - although it can be used as inspiration or motivation.

All this tied together can lead to impulsive spending habits in attempt to feel rich or content with their financial status.

Yet overall, regardless of achieving financial milestones or savings goals, young people still feel like they're behind, thus continuing the cycle of money dysmorphia.

Ms Baker added that those with money dysmorphia also tend to never celebrate their accomplishments - such as saving $10,000.

'We always look at what we don't have. Sometimes you just need to take a step back and be thankful for what you do have - perhaps like money to buy food or the roof over your head,' she said.

'What I've also noticed is that younger generations want to wear fancy clothes and drive nice cars, but they're all rented and don't own them - tracing it back to the fact that everything isn't what you think.'

How to overcome money dysmorphia

To change this way of thinking, Ms Baker recommends taking a detailed, honest look at your finances then establishing realistic financial goals.

Then make a plan on how to achieve the goals listed then gradually work towards these without comparison to others.

Rather than budgeting Ms Baker recommends the term 'spending and investing plan' to give individuals freedom with their finances.

'Budgeting can feel like handcuffs sometimes, but setting up a plan allows yourself to still buy what you like while still saving a portion of your income,' she explained.

It's also ideal to schedule automatic payments after each paycheck to help keep track of your savings and spending. This way it's easier to see how much money is leftover after allocating a certain amount to savings.