Some 43% of Gen Z and 41% of millennials say they suffer from a flawed perception of their finances, dubbed money dysmorphia

Some 43% of Gen Z and 41% of millennials say they suffer from a flawed perception of their finances, dubbed money dysmorphia, per CreditKarma.

In late 2023, a novel trend emerged both online and across various social media platforms, where individuals began questioning their financial status. This trend, termed "money dysmorphia," refers to a condition in which individuals feel insecure about their financial situation, regardless of its actual reality. However, this growing phenomenon is detrimentally affecting people's finances, particularly among younger age groups.

A recent study conducted by Qualtrics on behalf of Intuit Credit Karma reveals that 29% of Americans experience money dysmorphia. In this survey, money dysmorphia is defined as having a distorted perception of one's finances, potentially leading to unwise decisions. Notably, this issue is significantly more prevalent among younger generations, with 43% of Gen Z and 41% of millennials reporting experiencing money dysmorphia, compared to 25% of Gen X and merely 14% of respondents aged 59 or older.

Among those experiencing money dysmorphia, a striking 82% express feelings of financial lagging behind, in contrast to 29% of respondents who do not grapple with similar financial insecurities. Broadly, nearly half (48%) of Gen Z and 59% of millennials express feelings of financial inadequacy, likely contributing to the sense of being financially behind. Despite many acknowledging this sense of lagging, 59% of respondents also claim to feel financially stable, underscoring the disparity between one's perception and the reality of their financial stability.

Surprisingly, 37% of respondents experiencing money dysmorphia reported having savings exceeding $10,000, with 23% of them possessing savings surpassing $30,000. This surpasses the median savings amount for Americans, which averages around $5,300. However, respondents without money dysmorphia were more likely to have savings and in larger quantities. The study indicates that 52% of Americans without money dysmorphia have savings exceeding $10,000, with 32% of them having savings exceeding $50,000.

The concept of comparison appears to exacerbate money dysmorphia, as individuals become fixated on the notion of attaining wealth in an era where it seems increasingly unattainable. More than a quarter (27%) of Americans confess to being fixated on the idea of wealth, a sentiment particularly prevalent among younger generations, with 44% of Gen Z and 46% of millennials admitting to such obsession. Moreover, over half (54%) of respondents experiencing money dysmorphia express obsession with the idea of wealth, compared to only 12% of those who do not struggle with the condition. Despite this preoccupation with extreme wealth, 52% of Americans believe they will never achieve riches, a figure that rises to 69% among those experiencing money dysmorphia.

Beyond the apprehension of never attaining wealth, 95% of Americans with money dysmorphia assert that it negatively affects their finances. Among them, 40% claim that money dysmorphia has hindered their savings efforts or prompted them to overspend (38%) and accumulate more debt (32%).