Money dysmorphia, the experience of believing you're better or worse off with money than you actually are, can lead to poor financial decision making. If you believe you are better off than you truly are, you can spend beyond your means and end up in debt, or even facing bankruptcy. On the flip side, believing you are worse off could lead to anxiety, stress, even hoarding behaviors.
There are numerous signs Gen Z is facing negative money dysmorphia:
They're anxious about the headlines
Whether it's doom-and-gloom headlines about tariffs or a looming economic recession, many Gen Zers feel disillusioned by the images of status they're seeing on social media from friends and the "end of the world" narrative they're reading about online.
They feel like they need to stay home, stop spending, and take on a mentality of shame around "fun spending" — outside of basic necessities — to feel in control and prepared for whatever is coming their way financially.
Even if their bank accounts are telling them that they're okay, they feel a constant pressure to do something different: to spend on status trips like a tropical vacation with friends, buy the newest designer bag advertised on TikTok, or even save thousands to account for incoming rising costs, even when nothing in their financial lives has changed yet.
Of course, preparation and a healthy amount of worry about the future, if sometimes necessary or often natural, is one of the signs Gen Z is experiencing money dysmorphia and actually doing better than they think.
They're aware of what's going on in the current economy, but still struggling with unpacking and acknowledging the harmfulness of social media in pressuring overconsumption, status symbols, and overspending without reservation.
Long-term investments feel like a waste
Coupled with the "end of the world" narratives many Gen Zers are privy to reading about online, the lack of long-term investments, like homeownership or retirement, seem completely out of reach for many young people.
They're less likely to save and budget because they don't have any long-term financial goals. If they're not already living paycheck-to-paycheck, they're spending the majority of their money on the present moment, like going out with friends or making their living space more comfortable.
Of course, part of this trend is also fueled by Gen Z values — they care less about the traditional financial goals like homeownership that older generations appreciated, and more about the present moment, building connections, going out, traveling, and making memories today.
They have unrealistic expectations
Considering Gen Z has more accessibility to unrealistic societal standards and expectations around money on social media compared to older generations at the same age, it's not surprising many of them are experiencing money dysmorphia, feeling behind in the face of influencers being gifted designer items and friends quietly taking on debt to fund their Instagram vacations.
Research from CivilScience also suggests Gen Z has the lowest rates of financial literacy than their older counterparts, meaning they struggle to contextualize their income, spending habits, and future planning, even outside of the pressure from unrealistic expectations online.
They feel guilty for spending money
According to a report from CashApp, it's not entirely uncommon for Gen Z to harbor constant regret and guilt over their spending habits — from basic necessities to larger extravagant purchases. The act of spending money is inherently rooted in shame for many Gen Zers experiencing money dysmorphia, because they feel more behind and uncertain than they believe they should be at their age.
Stuck in a cycle of instant gratification and guilt, these young people often fall into unhealthy spending habits from a young age, unsure of how to break the cycle and adopt better habits.
For more signs GenZ is experiencing money dysmorphia, read the full article here.
Feelings about money are complex. There are many factors that influence how individuals view finances. But a strong financial literacy foundation built from an early age can help minimize external factors and a warped perspective of your own situation. In other words, the more you know, the better you are to have a handle on your money. And potentially, the more realistically you view your financial situation. It could be helpful to meet with a financial advisor, and expert who can offer an unbiased view of your situation.