According to the American Psychological Association (APA), 64% of adults say that money is a significant source of stress in their lives.
While a lot of that stress can be attributed to a combination of low wages and high costs of living, there is another form of financial anxiety that doesn’t get a lot attention: money dysmorphia.
As a result, today we will be looking at what money dysmorphia is as well as potential causes of money dysmorphia.
Let’s dive in.
Note: I am not a medical professional, this is not medical advice.
The Definition of Money Dysmorphia
The word dysmorphia was originally used to describe a mental health disorder called body dysmorphic disorder (BDD).
Mayo Clinic defines BDD as:
[The inability to] stop thinking about one or more perceived defects or flaws in your appearance — a flaw that appears minor or can’t be seen by others.
Mayo Clinic
With this mind, we can reasonably define money dysmorphia as:
Dissatisfaction associated with one or more perceived defects or flaws in our finances — a flaw that appears minor or can’t be seen by others.
What’s interesting to note is that this form of financial anxiety can be present even if there are 0 issues with our finances.
Therefore, even if we have our financial life together, money dysmorphia can still manifest itself in thoughts such as:
- “I feel guilty spending money on myself.”
- “I don’t feel like I’m saving enough, I need to save even more.”
- “I can only spend money on things I actually need like food.”
And these types of stressful thoughts can have serious health consequences.
A study conducted by the WZB Berlin Social Science Center found that people who considered themselves poor are 38% more often to get sick and 48% more likely to be impacted from health problems than those who do not. Furthermore, the APA also found that long-term stress can increase our risk of hypertension, heart attacks and strokes.
The bottom line is that money dysmorphia has the ability to not only impact our mental health but our physical health as well.
Potential Causes of Money Dysmorphia
Now that we have a better understanding of what money dysmorphia is, what are some potential causes of money dysmorphia?
We are afraid of the unknown
One potential cause of money dysmorphia is being afraid of the unknown.
This fear of the unknown can make us feel overwhelmed. Additionally, it can also put a major dent in our confidence to handle our finances.
This may be the result of having an external locus of control belief system. In other words, we may feel like there is little that we can do to better our financial situation.
As an example, we may be in a great financial situation with a good-paying job, low expenses and the ability to save. However, we still may feel compelled to resolve this anxiety about the future by doing the few things that we feel like we have control over.
This can manifest itself in ways such as stockpiling as much money as possible, even if that means sacrificing doing things today that actually increase our happiness.
We had terrible experiences with money
Another potential cause of money dysmorphia is having terrible experiences with money.
In the below example, a Reddit user described how they developed money dysmorphia via a traumatic experience from their childhood:
Despite this Reddit user’s household income being in the top 6.28% of all US households in 2021, they lost everything. As a result, this ended up shaping their belief that they’ll never be able to make enough to feel financially successful.
So even if the above individual was now living a life that worked for them, they may feel compelled to constantly try to increase their income. Not because they need it to support their lifestyle, but because they feel like that’s the only way for them to feel financially secure.
But what’s that number they need to achieve to be happy? $500K / year? $1M / year? This can lead to a never-ending pursuit of striving for more, more and more.
We want to become financially independent as soon as possible
A final potential cause for money dysmorphia is wanting to become financially independent as soon as possible.
At it’s core, financial independence is an amazing thing. It’s the point where we can shift our focus from accumulating wealth to living our lives to the fullest.
However, we may feel compelled to try and speed up our journey as much as possible.
And this isn’t necessarily a bad thing. However, when we begin to view our lives just in terms of dollars and cents, we lose the spirit of what financial independence is supposed to represent.
As a result, we may feel like we don’t have any money to enjoy today because we are saving a crazy amount of it. When in reality, we need to find that balance that works for us so that we can enjoy our lives today as well as set ourselves up for success tomorrow.
Speaking of…
Final Thoughts
When I first discovered the Financial Independence Retire Early (FIRE) movement in 2016, I was all in.
However, I was always stressed the hell out trying to find ways to maximize my savings rate. This unhealthy obsession always made me feel guilty about spending money on myself. I was miserable.
Fortunately, I was able to kick my money dysmorphia and start enjoying my life. So much so that I bought a $1600 electric skateboard!
This required a hard and honest conversation with myself (not on buying the skateboard, that was easy LOL). However, the end result was finding a lifestyle that I was comfortable with and not stressing out to maximize my savings rate.
Have you ever experienced money dysmorphia? How have you been able to cope with it?
Thank you for reading! 🙂
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