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Do you frequently feel financially strained, even when your account shows a healthy balance? Do small expenses weigh heavily on your mind, even when you can easily afford them? If your financial reality seems to clash with your perception, you might be experiencing something known as ‘money dysmorphia.’ While it’s not a formal diagnosis, this popular term describes the disconnect between our financial mindset and our actual money habits. I consulted financial therapist Lindsay Bryan-Podvin to gain insight into what influences our financial perceptions and how we can close the gap between how we see our money and how it really is.
What exactly is money dysmorphia?
Bryan-Podvin suggests that a more fitting term for this condition might be 'cognitive dissonance,' which refers to the gap between how you perceive yourself and your actual behaviors. For example, you may view yourself as a careful saver, but a closer look at your bank statement might reveal frequent takeout orders. Alternatively, Bryan-Podvin points out that some people set ambitious New Year’s resolutions, only to end up disappointed when they can’t save $1,000 by January 31. In her practice, Bryan-Podvin observes that perfectionists often struggle the most with this issue. Their fear of failure prevents them from taking action, even though they know the changes they want to make. If this resonates with you, here are some strategies to help you cope.
What to do if you're experiencing money dysmorphia
Bryan-Podvin suggests a helpful exercise: Grab a piece of paper. On one side, list your financial goals: Where do you hope to be? On the other side, note your current financial situation. Your next step is to figure out how to close the gap between these two points. Set a timeline with key milestones that will help you progress toward your goal. For example, if you aim to save $5,000 for an emergency fund, your first milestone might be saving $50, then $100, and so on. Along with these targets, consider the behaviors you need to adopt to reach these amounts. Perhaps it’s cutting back on Lyft rides or learning to meal prep.
Here are some more actionable steps to close the gap between where you are now and where you want to be.
Track your spending meticulously. Keep track of every expense for 1-2 months to get a clear picture of where your money is going. See how much you're spending on needs versus wants. This gives you hard data to challenge the feeling that you’re financially struggling.
Automate saving and investing. Set up automatic transfers from your paycheck into savings and investment accounts. Gradually build wealth over time and watch your balance grow.
Eliminate unnecessary expenses. Review subscriptions, memberships, and services you don’t use frequently. Cut costs on things that aren’t adding much value to your life.
Steer clear of social comparison. Don’t judge your financial progress by how others are doing. Focus on your own goals and needs.
Celebrate your financial victories. Mark milestones like paying off debt, hitting savings targets, or making smart investments. Acknowledge your achievements.
Find balance. Treat yourself occasionally without guilt. Keep an eye on excessive financial anxiety. Don’t let money dictate your life.
Lastly, Bryan-Podvin stresses the importance of accountability. As discussed earlier, we’re more susceptible to financial peer pressure than we often realize. “Voicing your goals to people whose opinions matter to you can make a big impact,” Bryan-Podvin explains. You don’t need others to mirror your spending habits to respect your budget and boundaries; true friends will happily join you in more affordable alternatives.
If you're finding it difficult, don't hesitate to seek help. Connect with a financial therapist like Bryan-Podvin. Over time, you can retrain a money dysmorphia mindset. With the right tools and expert guidance, you can bring your financial perceptions more in line with reality.
