Stressed About Your Finances? You May Have Money Dysmorphia

Don’t let an unhealthy relationship with money get in the way of your retirement

Nicole Pajer,

AARP

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Published January 23, 2025

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Are you stressed about money to the point where it affects your purchasing decisions and lifestyle, even though you’ve maintained healthy financial habits? You may have money dysmorphia.

While it’s not an officially recognized medical diagnosis, experts have coined the term to describe a distorted view of one's relationship to money. “Money dysmorphia is when someone’s perspective on their finances doesn’t match their financial reality,” says John Roland, John Roland, a private wealth advisor at Northwestern Mutual in Chicago. It’s a form of financial anxiety that can be the cause of a lot of unnecessary stress.

The concept of money dysmorphia began spreading across social media platforms in 2023. It became a trending topic on TikTok with people seeing others living their best lives taking luxe vacations, dining at fine restaurants and buying huge houses. Comparing themselves to the 1 percent led many to speak out about feeling like they didn’t have enough money to live the life they wanted, regardless of how much they were making.

While initially linked to Gen Z and millennials, money dysmorphia is also impacting older adults. A survey conducted by Credit Karma in December 2023 found that 14 percent of Americans aged 59 and older identify with experiencing some form of money dysmorphia.

The path to money dysmorphia

Everyone’s road to money dysmorphia is unique, but there are some common issues that can lead people there. “This often comes from childhood experiences,” says Erik Krom, president of Clear Creek Advisors, a Denver-based firm that focuses on retirement planning. “Someone might have grown up with very little money, or they developed a fear of running out of money after watching a loved one suffer with long-term care costs.” A traumatic financial event, a temporary windfall, or a period of scrimping and saving can also lead to the condition. Additionally, a desire to keep up with the Joneses or insecurity from comparing oneself to others can play a role too, says Roland.

But no matter how someone arrives there, money dysmorphia, Roland says, has the potential to significantly impact your life. “Having a distorted view of your finances can be a catalyst for making poor financial decisions, which compound over time,” he says. The crux of the condition is the fear of running out of money, even when you’re financially stable.

Older adults can be especially susceptible to money dysmorphia as they prepare for retirement. After all, it can be difficult to transition from earning a steady paycheck to living on a fixed income from savings when you stop working. To compensate, some people avoid spending money out of fear and miss out on the experiences they’ve been saving for, says Krom.

How to spot the warning signs

Because money dysmorphia is rooted in how someone wrongly perceives themselves and their financial situation, Roland says it may be difficult to self-diagnose. Here are a few signs that you might be experiencing this unhealthy relationship with your finances.

Excessive frugality or spending. If you’re experiencing money dysmorphia, you may have a hard time enjoying the lifestyle you’ve worked so hard for. “This could manifest itself as denying yourself simple pleasures or big plans in retirement and constantly worrying about even the tiniest way to save,” says Roland.

Some people with money dysmorphia may go in the opposite direction, Roland says, where they spend excessively and burn through their retirement savings at an unsustainable pace.

Buyer’s remorse. You got a great deal on the new television that you wanted, but now you’re beating yourself up about spending money to purchase it. “People experiencing financial dysmorphia may feel extreme guilt or worry after making a purchase, regardless of cost,” says Roland.

Difficulty spending money, even on necessities. Do you have a roof that needs repairing but you keep putting it off? Financial anxiety and fear can prevent you from making necessary expenses. “Though logically one can afford it, this self-limiting behavior results from irrational worries that any amount will bring about ruin,” says Dr. Mary Poffenroth, a behavioral scientist and author of Brave New You: Strategies, Tools, and Neurohacks to Live More Courageously Every Day.

Holding back from having fun. Some people get so worked up about the cost of going out, traveling or participating in activities that they simply don’t do it. This can result in deferring things that bring joy to a future point that may never come, says Chris Pollard, a certified financial planner at Goshen, NY,-based Great Path Planning and author of the upcoming book Untangling the Golden Knot: A Guide to Addressing the Worries of Wealth and Knowing When Enough is Enough.

How to heal from money dysmorphia

If you identify with any of the above, there are steps you can take to repair your relationship with money.

Develop money awareness. Pollard challenges people to tune into their fears about money. Spend a week tracking your ratio of positive to negative thoughts. Next, write a list of things that you value and that make you feel fulfilled besides money, like your social interactions, community and passions. When a negative money thought arises, shift the focus away from your finances and focus on the things you listed out above.

Take it slow. Overcoming money dysmorphia is not something you’ll accomplish overnight. “The fact is that it’s small, incremental changes, like being more intentional about how you spend just on one thing, that tend to make sustainable, positive steps toward accomplishing your goals,” says Michael Liersch, head of advice and planning for Wells Fargo. Making regular progress can help you rethink how you look at money and develop a healthy relationship with your finances.

Focus on the facts. Poffenroth suggests maintaining a diary where you track your income and expenses to gain clarity on your financial situation. “Rather than letting worries run wild depending on guesses and what-ifs, this data-driven approach helps ground them in reality and help to control them,” she says.

Create a budget. Once you have a firm grasp on your expenses, set boundaries for your spending. “Retirees and older adults are often afraid to use their money because they falsely believe they’re overspending,” says Krom. “Knowledge brings confidence, and knowing exactly how much money you’re spending each month will give you more freedom to enjoy your money.”

Stop comparing yourself to others. Frequently comparing your lifestyle to other people can lead to unhealthy spending habits, especially in today’s digital era, where people post photos of their lavish trips and designer handbags on Instagram, Facebook and other social media. One survey found that people who spend more than 3 hours a day on social media are significantly more likely to make impulsive financial decisions. So try cutting back on social platforms — setting a time limit of 30 minutes per day can reduce anxiety, depression and fear, a 2023 Iowa State University study found. And remember that what you see online is not necessarily real life, or something you must aspire to.

Ask for help. If you’re feeling overwhelmed about money, consider working with a financial advisor who can review your finances. This may help to reassure you that you are probably doing better with money than you think you are. If you need a little boost in that department, an advisor can offer budgeting tips to help you feel more confident on your path to retirement.

Also, don’t be afraid to seek out support for the anxiety that money dysmorphia may be causing you. Pollard says a licensed psychologist, mental health counselor or social worker can help you address money fears.

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