Outlooks & Setbacks Saturdays

“...If you look at mainstream economics there are three things you will not find in a mainstream economic model - Banks, Debt, and Money. How anybody can think they can analyze capital while leaving out Banks, Debt, and Money is a bit to me like an ornithologist trying to work out how a bird flies whilst ignoring that the bird has wings...” ― Steve Keen

Money dysmorphia is what happens when your feelings about money don't match the facts, whether you're doing better than you think or worse than you're comfortable admitting.

This isn’t a clinical diagnosis, but it's a very real challenge for many people today. This mismatch is often shaped by comparison, internalized pressure, or past experiences with money, and it can lead to shame, stress, overspending, or extreme saving.

In this article, we’ll explore what money dysmorphia is, where it comes from, and what you can do if it’s affecting your financial well-being.

Key Takeaways

• Money dysmorphia is a skewed view of your financial reality, shaped by social comparison, financial trauma, or misinformation.
• It can lead to harmful behaviors like overspending, financial avoidance, or extreme frugality.
• Shame is a common emotional symptom, often preventing people from seeking support or discussing money openly.
• Impulse spending and fear-based saving are signs that your perception of money may not match your financial reality.
• You can counter money dysmorphia with self-reflection, budgeting tools, financial literacy, and support from a qualified financial therapist.

What Is Money Dysmorphia?

Money dysmorphia describes a distorted perception of your financial situation. Like body dysmorphia, it warps how you see yourself, only with money, not appearance. You might feel worse off than you are, or ignore serious financial warning signs.

"It's having a distorted perception of your financial situation, which often happens when there's a disconnect between reality and our perception," said Kate Dorman, certified financial therapist and founder of Sound Financial Therapy.

Someone might have significant wealth and still feel anxious and deprived, or someone might be deeply in debt but convinced they’re doing fine.

It can show up as compulsive spending, fear-driven saving, or a persistent sense of financial failure, regardless of your actual situation.

How Money Dysmorphia Forms

"We all have a unique relationship with money, shaped by many factors, such as our upbringing, culture, and generational attitudes, a process researchers refer to as financial socialization," shared Dr. Emily Koochel, a financial wellness expert at eMoney Advisor. "These influences help shape both our money mindset and overall financial wellness."

"Research has shown that frequent exposure to upward comparisons on social media can lower self-esteem. People often compare themselves to curated portrayals of others’ success (e.g., vacations, new homes, lifestyle upgrades), all of which can distort their own perceptions and potentially contribute to money dysmorphia," Koochel added.1

Dorman agreed, "Part of the problem with that, too, is that what people put on social media is not always reality. So now we're comparing our financial situation with what someone is projecting out to the world. And that might not be their real financial situation, but if I perceive it to be and I'm not doing as well as that person, that's going to impact how I feel about my own finances."

Other common contributors include financial trauma, unrealistic media portrayals, and societal pressure to “keep up.”

Signs You May Be Experiencing It

“As a financial therapist, the number one feeling that people come to me with is shame. It's not stress or anxiety, it's actually shame. And it's regardless of their race, culture, sex, or socioeconomic status. People feel so much shame around finance,” Dorman said.

Other signs include:

• Living paycheck to paycheck despite a decent income
• Overspending to project a certain image
• Avoiding your budget or bank statements
• Feeling like you "should" be able to afford more or spend less
• Hoarding cash or refusing to invest out of fear

“This behavior can also lead to deeper emotional impacts that reinforce negative and distorted thought patterns about your financial situation,” said Koochel.

When left unaddressed, those patterns can create a cycle that’s hard to break, one that shapes not just your decisions, but your entire relationship with money.

What You Can Do About It

Awareness is the first step. Reflecting on how you learned about money and how those lessons still shape your behavior can uncover patterns that no longer serve you.

Dorman and Koochel recommend limiting exposure to triggering content. Unfollow influencers who make you feel inadequate, and focus on real connections rather than curated portrayals of success.

"Working on asking yourself before making purchases, who am I making this purchase for? Am I making it for myself? Am I making it for other people?” said Dorman.

Tip

Before you make a purchase, ask yourself: “Is this really for me, or am I trying to maintain a certain image?” Checking in with this question can help reduce comparison-driven spending and build better habits over time.

Steps Toward a Healthier Financial Mindset

• Track the facts: Know your income, spending, debt, and savings.
• Name your values: Define financial success on your own terms.
• Spend strategically: Use money as a tool, not a coping mechanism.
• Ask why: Check whether a purchase reflects your needs or someone else’s expectations.
• Celebrate small wins: Progress counts, even in tiny steps.

Most people come into financial counseling carrying shame, but with compassion and context, they can build a healthier relationship with money.

The Bottom Line

Money dysmorphia can cloud your judgment and quietly sabotage your financial well-being. But you’re not stuck with it.

“Regardless of which of these two ways you could go with money dysmorphia, it's totally possible to change, to make changes and to feel better about your financial decisions and to feel more in control of your finances,” Dorman encouraged.

Get curious about your financial beliefs, build your financial knowledge, and seek out support to move away from distorted thinking to empowered decision-making.

Self Harm & Self Sabotage

What is one self-sabotaging financial habit you are working to break?