SAVE TIL IT HURTS: Beware “Money Dysmorphia”

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You may have read the stories of Your Survival Guy’s “Save Til It Hurts Hall of Famers,” Ronald Read, Geoffrey Holt, and Terry Kahn. These men put frugality and wealth building ahead of ostentatious spending and piled up millions of dollars. Now, CNBC’s Jessica Dickler reports on a syndrome that appears to be the opposite of saving til it hurts, “money dysmorphia.” In the old days, it was called spending more than you could afford. Today, it’s spreading, according to Dickler, and it’s especially driven by young adults who see what appears to be wealth on social media and then attempt to “keep up with the Joneses.” Dickler writes:

Overwhelming evidence suggests social media has a negative impact on self-esteem.

That’s not only true for how people feel about their appearance and social status but also their financial wellbeing and economic standing.

A new term, “money dysmorphia,” aims to describe the distorted view of their finances that nearly one-third, or 29%, of Americans say they now experience, according to a recent report by Credit Karma, often from comparing their financial situation to others’ and feeling inadequate.

“Money dysmorphia is kind of like today’s version of keeping up with the Joneses,” said Courtney Alev, consumer financial advocate at Credit Karma.

Not surprisingly, money dysmorphia is even more prevalent among younger generations, according to Credit Karma. Roughly 43% of Gen Z and 41% of millennials struggle with comparisons to others and feel behind financially.

“This has been a problem for a very long time but social media has taken it to a whole new level,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

Many of those who experience money dysmorphia have above-average savings, Credit Karma also found. However, they are also likely to admit to being obsessed with the idea of being rich.

There is a “distortion between perception and reality,” Alev said.

That feeling of being well off is increasingly elusive, almost regardless of how much money you have, a separate report by Edelman Financial Engines also found.

Action Line: Save til it hurts. Getting to retirement and realizing you can’t afford it is dangerous. When you want to talk about a plan, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter. It might just be the cure for money dysmorphia!