Money dysmorphia is haunting millennials and Gen Zers

livemint.com:

Never hesitant to rebrand an existing phenomenon, millennials and their Gen Z ‘frenemies’ are admitting to having ‘money dysmorphia’—which is a feeling of insecurity around their financial situation even when the true picture reveals little cause for concern. Some 43% of Gen Z and 41% of millennials say they suffer from a flawed perception of their finances, according to a recent Credit Karma study. While it might sound like just another form of anxiety induced by TikTok feeds of short videos, money dysmorphia is a real problem that can cause someone to make poor or ill-informed decisions.

Having a financial perspective rooted in fear rather than fact is nothing new. Those of us with grandparents belonging to the ‘Greatest Generation’ [as the World War II generation of American citizens is often described in the US] will recognize the Depression-era scarcity mentality. A scarcity mentality is a valid way to experience the world.

An upbringing in which finances were tight will have a lifelong impact on how one thinks about and interacts with money. The trouble with money dysmorphia is that it can distort the thinking of someone whose lived experience is not one of scarcity but of stability. This is not to suggest that all Gen Zers and millennials were raised in financially stable homes and have continued to a comfortable, middle-class existence.

Both generations have been dealt blows in terms of experiencing ‘once in a lifetime’ or ‘generation-defining’ events at young ages. So perhaps it isn’t surprising that more than 40% of both generations report having money dysmorphia and 48% of Gen Z say they feel left behind financially and 59% of millennials feel the same. One major shift for both generations compared with