Searches for “money dysmorphia” have soared in the past year – climbing 136%.
But what is it? Why are people concerned about it? And is there a chance you suffer from it?
The term is used to describe a disconnect between someone’s financial reality and their perception of how wealthy they are.
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Though it is not a medical diagnosis, those who experience it can develop unhealthy spending habits.
Sometimes people feel they have less money than they do, which can cause excessive panic and anxiety around finances.
Christie Cook, finance expert at Hodge Bank, said some people may even avoid small expenses like going out for a meal, even if they can afford it, due to feeling financially insecure.
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In other cases, people believe they have more money than they do, which can lead to overspending and landing themselves in financial difficulty.
“With social media fuelling unrealistic comparisons and constant negative news about the cost of living crisis, it’s no surprise that many people are experiencing financial anxiety,” she told Money.
The bank’s research was very personal, with one of its employees, Emma Hull, experiencing money dysmorphia herself.
The homeowner, 29, who has a good sum of money tucked away in savings and investments, told Money it has caused her to feel “panicky” at times.
“I recently had a speeding fine and when it came through it ruined my day hugely as it was an unexpected cost that I, in my head, couldn’t afford. However, while I could definitely afford it, it just meant that I couldn’t put as much into my savings as I wanted to,” she said.
“Savings are there for emergencies and to be used, but when it gets lower than I’d like it to, I definitely freak out a little bit.
“We all have that post-night out fear of checking bank accounts, but even though I try and do things on the cheap… there are always costs on my bank that I don’t want to see, and checking it and seeing money come out definitely makes me a bit panicky.”
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Money dysmorphia has also left her finding it difficult to splurge on things for herself, even when she can afford to.
“I would love to care less and be able to treat myself a little more, but my mindset often tells me that I can’t do this even though my bank account tells me I can,” she said.
“The main question that I ask myself constantly is ‘do you really need that?’ I’m also someone that checks their bank every single morning, so if I know I’m going to have slightly more money spare than normal, then I might stretch, but I’m definitely not an impulse buyer.”
To try to tackle the problem, Hull said she has set up different saving pots on the banking app Monzo to help set aside money for different events.
“When the time comes for those things, hopefully it won’t be as such a burden as my bank has technically already accounted for that spending,” she explained.
Away from Hodge Bank, other companies have noticed clients facing similar issues – even if they are very wealthy.
Ollie Saiman, co-founder of wealth manager Six Degrees, deals with clients who have made “more wealth than they could ever spend” but still feel as financially insecure.
“We find it extremely common to encounter feelings of financial insecurity – and concerns that there isn’t enough money to last,” he told Money.
“When identifying ‘how much is enough’ for the families we look after, we find it crucial to recognise the right-brain and left-brain dynamics at play.
“The rational left brain might know that there’s sufficient capital to last a lifetime – or several lifetimes – but the emotive right brain still worries about being able to make ends meet. This concern can make it difficult for them to spend their wealth, and only by understanding a client’s personal background can we help them overcome these emotions,” he explained.
The reason people suffer from money dysmorphia is unclear, by Cook believes there are three main potential causes.
Cost of living crisis
The cost of living crisis is one of them, leading people to panic-save due to hearing about financial uncertainty.
“People may feel more in control if they put every single pound away in case of emergencies when they already have a savings account that could get them through any unexpected costs,” she explained.
Childhood financial environment
“Growing up around people, such as parents, who suffered financial hardship can shape attitudes into your adulthood,” Cook said.
“It’s important to recognise your own worth, and how your finances are different.”
Past financial trauma
Cook said those who’ve had bad financial experiences, such as bankruptcy or fraud, can be left feeling more anxious about money.
They can feel this way even if their financial situation is now stable and there’s no immediate risk, she explained.
With many still unfamiliar with the term, it can be hard to recognise those who are experiencing money dysmorphia.
Cook pointed out some signs that people can look out for.
“The most obvious way to recognise if you suffer from money dysmorphia is by worrying about money too much when there is no immediate danger, such as losing assets or heading into bankruptcy,” she said.
“If checking your bank balance causes you stress or panic, or you feel guilty about how much you earn or save, then this could be a trait.”
At the other end of the spectrum, she said people might be displaying self-sabotaging habits, such as offering to cover the costs for other people even if they can’t afford to.
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“Equally, if you avoid bank statements or dealing with financial issues, then you could be in denial about how much you’re spending – ignorance isn’t always bliss, especially if it means you’re paying interest or late fees by ignoring these,” she said.
If these feelings sound familiar, she said it is worth researching the issue or speaking to a therapist.
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Cook also offered some tips on how to overcome it, such as:
