Dealing with Money Dysmorphia: When Perception Isn’t Reality

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A few weeks ago, I asked you all if the concept of "disordered financial behavior" resonated with you—and the response was overwhelming. And while a large faction of millennials and Gen Z deal with money dysmorphia—or as I'm inclined to call it, money disorientation—I'm not sure if the traditional blame on social media is the real cause. So how are we developing money dysmorphia, and how can we learn to deal with it?

Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer and additional fact checking comes from Scott Wilson.

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Transcript

Transcript

Katie:

One early morning a few weeks ago, I summoned an Uber for a ride to the Orlando airport, and within a couple of minutes this guy in a black Infiniti appeared in my hotel valet’s parking area and he loaded my bags into his trunk. It was still dark outside, we're driving along, chatting, kind of eyeing this flickering check engine light in his car and somehow we get on the subject of social media. He told me he deleted his when he turned 25 because it was making him feel badly about himself. He would see male peers that were flexing their nice watches or vacations or he said sometimes he would see posts from women his age declaring that they were uninterested in men who couldn't provide a certain lifestyle. It was all too much, so he decided to tap out.

He was my age now, 29, and in the four years since leaving social media, he said he was feeling a lot better about his choices and that he was second guessing himself less and feeling just more clarity in general.

And a few hours later I was sitting on the tarmac and I found my thumbs drifting to Instagram as they often do. And as I scrolled, I imagined what his social media free life must feel like. I tried to visualize how mine would change and I've done social media free spurts in the past where I've deleted the apps from my phone or only allowed myself to scroll on the computer or blocked my access completely for a period of days or weeks. And while it did lead to more peace, it also felt like I was disengaged from the broader world in a way that always keeps me coming back. So I found the advice to just delete it all…it's probably sage, it's probably good advice, but it is extraordinarily difficult in practice, especially because I find a lot of good stuff on these sites too. I find stuff that expands my brain or makes me think differently or connects me to interesting people or is just honestly entertaining.

So this advice to limit or remove your social media time is often the solution offered for the problem that we're discussing today: money dysmorphia and you'll see why shortly.

Welcome back to the Money with Katie Show, Rich People. As always, I'm your host, Katie Gatti Tassin, and today we are talking about a hot financial topic that borrows its name from Body Dysmorphic Disorder, which is a mental illness characterized by fixating on a perceived flaw or defect in your physical appearance. Usually this is treated with cognitive behavioral therapy and medication, but much like body dysmorphia, there is no one specific manifestation of money dysmorphia.

We're talking about it because a few months ago a Credit Karma report spawned a deluge of articles on the subject. The report found that slightly fewer than half of millennials and Gen Z are obsessed with the idea of being rich compared to just one in four at the full population level. So here you can imagine that gif of Homer Simpson slowly receding into the hedges. That's me right now. I'm like, you don't say, haha.

Well to this I would say yeah, I mean the baby boomers aren't obsessed with becoming rich because they're already rich. But I digress. Sorry for the Gen X erasure by the way, but I feel like y'all are kind of fairing the way that we are at. At the aggregate of those experiencing money dysmorphia, they found that a whopping 82% reported feeling behind financially compared to only 29% of the group who didn't experience money dysmorphia.

And a few things that I'll call out right off the bat, is number one, we don't know the survey methodology beyond the fact that it involved 1006 US adults over the age of 18, but it's always worth remembering that it's possible asking someone, “Do you experience money dysmorphia?” And then following that up with a question like, “Do you feel financially behind or vice versa?” might skew your results. And I have no idea how they structured these questions or what they asked. So that's good to keep in mind.

And sometimes catchy phrases that feel resonant have a way of sticking. Money dysmorphia is not a diagnosable condition in the same way that body dysmorphic disorder is a diagnosable condition, but it's picked up a lot of steam in your common financial news players—Fortune, Business Insider, CNBC, you name it, it's there—because there's something about the concept that just feels true.

But this report wasn't the birth of this phrase. I found a personal essay in The Guardian from 2019 in which the writer Mona Chalabi described how her subjective feelings (of not having enough money) about her money (of which she objectively had enough) rendered her incapable of buying nice things. She felt so uncomfortable with the cost of a $400 jacket that she hid it in a garment bag in her closet so she wouldn't be reminded of the shame and supposed waste of the purchase.

Mona's story illustrates that there are often two ways in which this dysmorphia can manifest. You can either be the type of person who has a lot of money saved but doesn't believe it's enough, so you aren't able to use it meaningfully, or you can be the type of person who overspends but refuses to confront the reality of your financial situation.

As you can probably deduce by that description, this means there isn't one workable remedy, though the causes might be relatively similar. Longa Chinyoka wrote about this phenomenon for The Good Trade and interviewed a certified financial therapist who told her that the causes of money dysmorphia are often perfectionism, depression, anxiety, low self-worth or low self-esteem. But I wonder too, how much of this might be cyclical, like low self-worth might make you more susceptible to money dysmorphia, but then the experience itself might make those emotions worse. And regardless of the DSM-5 causes, most discussions of this topic identify one culprit: social media.

We'll get into that after a quick break.

Across sources, it's almost always assumed that social media is the primary source of feelings of money dysmorphia. In fact, it's repeated so often that it's usually stated offhand as a given without really any substantiation like, “Oh, well, with the steady stream of conspicuous consumption on social media, it's easier than ever to feel like you're always on a beer budget, even if you can afford champagne.”

And I don't necessarily disagree with that conclusion, but it does strike me as incomplete to continuously blame the technological bogeyman of TikTok feels like part of the story, but nowhere near the entire thing, particularly because social media facilitates material prosperity for many young entrepreneurs, writers and artists who did not have access to institutional prestige or approval. Justin Bieber was discovered on YouTube.

It almost seems to me that social media is a sort of response mechanism rather than the origin, where you get this sort of trickle-down effect from traditional popular media and marketing efforts where these things reach the masses. And sure, we can more readily see rich people doing rich people things, but often those rich people's norms are being dictated from somewhere else, like by actual celebrities or in-person in groups cavorting around the Hamptons and swapping stories on private planes. The more I thought about it, the less money dysmorphia looked like an accidental byproduct of social media overuse and more like the explicit intent of a market-based economy. (Reagan!)

In some ways, distorted perceptions of your station in life are a necessary ingredient to grease the wheels of consumer behavior, either by encouraging you to work harder and strive for more or to spend money you don't have and use credit to make up the difference. Contentment and genuine security are anathema to capitalism's goals.

In Longa's piece, she mentioned that it felt as though the trends that she noticed online were starting to seep into her real life group of friends. It wasn't that she felt a distortion between her financial situation and what she was seeing online, but in her peer group, she felt like it was gravitating toward more expensive and more frequent outings.

Then there's the Wall Street Journal’s assessment, which also trains the microscope squarely on social media, but points to the way most feeds are a dizzying mix of hyper consumption and economic doomerism leading to what I'm going to call money disorientation. You're told in one swipe that you simply must try this new $70 moisturizer while the next video emphasizes how unaffordable housing is, and I'm not sure that we totally understand yet the ramifications of this type of context collapse.

But I knew one thing, I wanted to talk to people who felt like they were experiencing money dysmorphia. So as I often do, I put out a call for submissions…on social media. And I said, do you feel like you're experiencing money dysmorphia? So I described the different ways it could show up in your financial mindset. And after all the reading I had done, I kind of had one typecast vision in mind. A freewheeling 25-year-old with a grossly negligent relationship to her credit card statement, driven by a steady stream of TikTok shop purchases, totally unaware that she was slowly burrowing herself into a hole from which she would probably never emerge.

And instead, I received 137 emails over the next day, and to my surprise, almost none of them described the lifestyle of a shameless materialist chasing some excessive version of the American dream. The phrase that appeared in an uncanny number of them was, “I know it's irrational, but I am so afraid that the rug is going to get pulled out from underneath me at any moment.”

People described unbelievable stories that have shaped their feelings. One woman, whose father who had been an attorney went to prison, causing their upper class life to deteriorate before her eyes. Another described planning her own funeral with advanced stage Lyme disease and draining her net worth on medical debt only to make a miraculous turnaround and find herself faced with a bewildering set of emotions about money and life. And these messages left me pretty speechless, which as you'll know if you listen to the show a lot is pretty rare.

But 80% of them described some variation of a similar phenomenon: No matter how hard I work or how much I save, I feel like I am not doing enough. Only a handful of people mentioned the opposite in which they had a hard time facing reality and was spending too much. And one person described their experience as this: “I grew up in poverty, and if you didn't spend money fast, some bill collector would show up and take it. I have carried that attitude with me. I better use this money for something fun before someone takes it away from me.” And I found that to be really logical, if ultimately self-defeating.

And initially I had split my understanding of this dynamic into those two camps, the spenders and the savers. But after reading 137 anecdotes, I realized that what I said earlier, that the causes are all relatively similar, is true in a different way.

Perceptions of what's normal or what one should have are influenced by the world around us, but how we react to that influence can either induce the overly splurgy or overly restrictive response based on your personality and your tendencies. And sure, it's almost certainly selection bias, but it's a selection bias that in this case serves us well. These are the inner workings of the type of person who listens to a show about personal finance.

So in other words, it might not be representative of the general public, but it's almost certainly representative of our listeners.

The social media peer group driven influence is a knife that can cut both ways.

Amanda G.:

Hi, I am Amanda. I'm 28 years old from San Antonio, Texas.

Katie:

Amanda described her experience comparing herself to the online financial independence community of which she's a part.

Amanda G.:

So I was first introduced to the world of personal finance in college when one of my professors of assigned reading from Dave Ramsey's Total Mini Makeover, and I was just immediately captivated by the prospect of building generational wealth and as I went down the rabbit hole of consuming everything I possibly could to find out about financial independence, and that kind of naturally evolved into joining the JL Collins low cost index fund philosophy and maximizing credit card rewards and reading all the books and listening to all the podcasts and following all the Instagram pages. And it's really something that is still front of mind for me daily on how I can keep growing my knowledge and applying tips and tricks and hacks to my life financially.

Katie:

How long would you say you've been into this world?

Amanda G.:

I'd say for about seven, almost eight years now.

Katie:

Amanda's and her husband are not yet 30 and they have half a million dollars invested in a paid off home.

Tell me about your relationship with your numbers. How often are you engaging with your financial data?

Amanda G.:

I would say my relationship with numbers skews slightly towards the unhealthy side, but it's gotten a lot better as our income has increased. It's almost like gaining financial security can give you some peace of mind or something. I have a bad habit of checking my net worth daily, sometimes several times a day just to make sure that everything is still there. It's like there's a small fear inside of me that the third time I open my Personal Capital app in a row, it could magically be gone.

So I can pretty accurately tell you where all our money is going for the next year before the end of the current year, but where we're at currently in our career and journey to financial independence, I mainly just now track our income and savings rate at a high level to make sure that we are on track to meet our goals. I used to be really bad a few years ago where every notification I got on my phone that mine my husband's credit card was swiped. I would feel that little ping of anxiety, but I can more comfortably just reconcile or budget at the end of the month now and see that everything is tracking accordingly.

Katie:

Income and savings. Interesting. Okay. Well, you mentioned to me in your initial outreach that you were having a hard time. Sounds like things have improved, but that you do still sometimes have a hard time spending money on anything, and I'm curious why that is or why do you think that is?

Amanda G.:

I think as I began to see progress by putting all of the concepts that I had learned into practice, my money identity really quickly became a game of optimization and that desire to maximize my bang for my buck in terms of how every dollar can help us get to our goals quicker, coupled with the scarcity mindset that I was raised in really just kind of became this subconscious anxiety driven adversity to spending money on anything that wasn't helping us reach our goals. I would feel really guilty for a long time, and so after having some really personal hardships and reading “Die with Zero” in the past couple of years, I think I've really begun to come to terms with the fact that we only get one life and have really made an effort to allocate some funds for things and experiences that we can enjoy now and now when we reach our FI number in X years.

And I think that's when I really noticed how detrimental that state of mind was and also how hard it is for me to stop being like that. It became really evident when I actually put effort into stopping doing that.

And we work in an industry where it's not uncommon for people to have some level of generational wealth as well as drive really nice vehicles and buy brand new homes. And so even though we were saving a ton and making they moves on that front, I still felt like I was not as successful for a long time. And also consuming all of the financial independence content and seeing how quickly everybody's net worth was going up for those who were willing to share it and everybody hyping everybody up. It was a really encouraging place, but it also gave me anxiety to try to keep up. I think that the biggest growth I've had is realizing that that number on a spreadsheet is not the only goal. And I've heard the conversation a lot in more recent years in the financial independence community that the goal is living more towards living a happy life versus reaching a number on a spreadsheet.

Katie:

I heard from another gal, Alondra, who described an eerily similar approach to her finances: hyper aware of her numbers, guilt associated with purchases. You get the picture. And she pointed out that sometimes it's actually kind of hard to want to change, even if you know you're taking it too far because it works. You do get richer that way. If you value getting richer, you might accept some maladaptive tendencies to make it happen, especially if there's no clear healthy alternative path.

Another listener, Kayla said something similar but a little bit different. She wrote, “I feel like the same thoughts and habits that have helped me save a lot of money, aka pretending that my savings account doesn't exist and I'm broke are the same ones that keep me thinking that I literally have $0 to my name and I'm worried that if I keep going down this path, I'll never feel like I have enough.”

We'll get back to it after a quick break.

When we zoom out, I think it's interesting to explore the ways in which money dysmorphia is and is not generation specific, how it fits more broadly into American history. Think back on the life experiences of those alive during the last a hundred years. The oldest people alive today were kids during the Great Depression and their children, the baby boomers, were born right before the most widely prosperous era in American history, which meant that almost by default they were experiencing the winds of upward mobility.

Early Gen Xers have an experience that's probably more similar to the boomers, while late Gen Xers have experienced that more closely mirror the millennial condition. And it's possible that more millennials and Gen Z grew up middle class or upper middle class only to find that they were unable to sustain such a lifestyle for themselves. And today, while we don't know for sure how they're going to fare in the long term, it's estimated that around 50% of millennials and Gen Z will not attain a level of wealth that surpasses their parents' generation for the first time in modern American history.

And speaking of generational differences in parents, the vast majority of the people who wrote in referenced their upbringing as a means of explaining their current attitude, how their family experienced a financial crisis when they were young, or their parents were constantly beating the drum of frugality, or they felt like the poor middle class kid in the class part of town by comparison, which solidified their self-concept as fundamentally less than. One woman described “absorbing her parents' money panic” despite earning more than $250,000 per year and living well beneath her means.

It reminded me a little bit of a conversation that I had with JL Collins, the godfather of financial independence, earlier this year. We were talking about how kids who grew up upper middle class during the 1990s and early aughts got accustomed to vacationing at the Four Seasons, only to hit the real world and realized that their parents are not wealthy enough to continue bankrolling them such that they can live that lifestyle in perpetuity, and they are personally starting out in life as lower middle class or worse. And it feels like a major backslide. It feels like a lot of us may have subconsciously internalized an idea of what progress looked like, that it was inevitable. And this was the experience Maria had when she graduated from college.

Maria:

My name is Maria. I am 35 years old. I live in Miami, Florida.

Katie:

Maria's parents gave her a really fabulous standard of living. They paid for her college, they took her on international trips, a biweekly manicure/pedicure was just standard fare in her home. But she realized upon graduation that maybe her normal wasn't actually normal.

Maria:

I would say that I was very comfortable growing up, very privileged. I kind of had everything I wanted. Went to private school. I traveled to Europe, traveled to Caribbean. I kind of felt like I never had to worry about anything and that everything was always kind of figured out one way or another and it was very fun and I look back on it now very fondly and also very naively.

Katie:

When did it shift or what was the, I guess, transition like for you when you graduated and went on to support yourself?

Maria:

I was so clueless about everything, money that I didn't even know how much a paycheck should be to even cover the basic needs, what an annual salary could look like, what even were good benefits. It was nothing that was ever discussed at home.

So when I graduated college, I actually, funny enough, graduated with a finance degree. Mind you, there was no finance class that went over a personal finance or budgeting or this is how much you should allocate for certain things in your life.

And so when I left college, my first job was at a small asset management firm. I think my first salary was like $33,000 a year or something, and I realized I can barely cover rent, I can barely put food on the table with this amount of money. And that's when the gears started shifting for me. I was like, oh, I actually have no idea what a good salary is, how much I should even be making to pay even the most basic of things. And I really honed out. I started to learn a lot because I was at an asset management firm. I asked a lot of questions.

Katie:

And so how do you relate to money now? Because it occurs to me that growing up and having the benefit of a really nice lifestyle and then graduating and realizing that, oh, I'm actually not able to kind of provide the same thing for myself. How emotionally has your relationship with money changed? Was there anything in particular that allowed your perspective to shift?

Maria:

Definitely the first couple of years after college had a bit of a panic slash anxiety feeling around money. I was always like, there's obviously never enough. I have to save as much as I can. I just went from one extreme to another because I just felt that I had to catch up to some invisible thing that I didn't even know what it was, but I was like, well, if I want to live the lifestyle that I had as a child, then I need to start putting away money every penny that I can.

And so there was a lot of things that I gave up very early on in my career because I was like, no, I have to save. I can't travel. I can't do the fun thing just because I felt like I needed to save money and catch up professionally.

As I went on, I realized, okay, I can take a breather. I'm okay. I have enough money saved up for even if I lost my job for a year. I started looking at things in time increments. Do I have enough money that if I lost my job tomorrow I would be comfortable for X amount of time? Yes. And so once those things were checked off, I was like, okay, I can breathe. I can start doing more fun things now.

But it really took years, I think for me to feel comfortable with having a good relationship with money. And even now, sometimes I still struggle now with two kids. I'm always like, are we saving enough for them thinking about their school, their college, all of those things. It feels like there's always something else that you're trying to save up for or make more money for.

Katie:

Jia Tolentino writes about the experience of coming of age during the 90s and early 2000s in her book Trick Mirror and the quote sentiment that upward mobility felt expected and natural has always stuck with me: “I watched America's Next Top model in Project Runway shows that were all bustle and glitz and giddy. Up in Laguna Beach where the world looked like long granite countertops and lamp lits, stucco palm trees and infinity pools. Upward mobility felt like oxygen, unremarkable, ubiquitous. I wrote a thesis proposal about the American Dream. Then in 2007 home prices started rapidly declining. Homeowners started defaulting in great waves. Every time I passed by the TVs in the student center, they seem to be broadcasting news footage of families guarding their possessions on the sidewalk outside foreclosed homes. I found myself staring at my laptop late at night, embarrassed and revising. I'd been writing about immigrants and how uncertainty was central to the magic spell of America, but the backdrop had suddenly changed from prosperity to collapse.”

Jia’s description burned as I reflected on my own adolescence in northern Kentucky watching Lauren Conrad drive a BMW on the Hills and observing the Kardashians ever-expanding closets. I was told repeatedly and assuredly that if I worked hard, I could be and have anything I wanted. Ascension felt like the natural course one's life would take. And while we're quick to blame social media for this deeply shared cultural belief system, I'm also tempted to point the finger at traditional media, television, movies and their influence on our perceptions of what a normal life looks like. Consider the way in which historians attribute the enduring fantasy of the 1950s housewife, which was a relative blip to the fact that sitcoms became popular in the mid 20th century and blasted that ideal into millions of homes across the United States, one that thinly veiled white supremacists trad wives still revere today.

And some studies suggest this distorted rich people on TV effect has only worsened. A UCLA report found that shows produced after 2010 had twice as many wealthy characters as those produced in the 1990s. They write, “Based on their consumption of media, teens may believe that upward mobility and success is a given, but if systemic inequities make the dream nearly impossible to achieve, they may feel they only have themselves to blame.” The experience of the working poor is all but non-existent in popular television and movies. Only one came to mind quickly for me, the show Maid on Netflix, but as the study authors remind us, stories have enormous power to influence how teenagers and children understand their culture and environment.

It moves a sort of economic Overton window, shifting expectations upward and changing perceptions of what's normal at a level that I would consider far more ubiquitous and powerful than the uniquely calibrated filter bubbles that we are each engaging with.

It's probably worth pointing out that, again, this isn't actually natural, but is the inevitable consequence of a financial system that relies on growth. Another example that comes to mind is housing. You probably know by now, if you've been listening to this show for a while, that the median house hasn't just increased in cost, but in size, it has increased 150% since 1980 and with fewer household members to fill it. This becomes a sort of chicken or egg. Are they building bigger homes because people want bigger homes or are people buying bigger homes, because that's what's available now?

Then there's another potential contributing factor that's not all together disconnected from consumer expectations going unmet: a sense of hopelessness that the future isn't worth saving for anyway, causing us to avoid the discomfort of poor financial choices and ignore the whole that we might be digging for ourselves. In researching this episode, I ended up on a subreddit devoted to a financial YouTuber named Caleb Hammer. Caleb's approach is pretty harsh, like a young, agnostic, and not-southern Dave Ramsey.

Caleb Hammer video:

Everyone say it with me. You are not a credit card person.

Katie:

When I watched some of his videos for the first time a couple of years ago, they seemed over the top critical, aggressive, and almost outright misogynist, as most of the guests whose finances he roasts are women. When I went back to his channel for this episode, I noticed that these trends have definitely intensified, but according to many of the threads in the subreddit comprising 32,000 members from his 1.3 million subscriber count, his borderline abusive tough love style is seemingly resonating with this audience.

One post in particular jumped out at me, a couple who despite earning $13,000 per month after taxes, had $47,000 in credit card and consumer debt who finally pulled their heads out of the sand and started taking their financial situation seriously, thanks to Caleb.

Though, it's probably obvious that this style is exactly the opposite of what someone who already experiences restrictive tendencies would need to overcome their mental blocks. So what do we do about it? If you need someone to berate you into living beneath your means, maybe Caleb is the right fit. And if you're someone who can't bring yourself to spend on anything because you feel as though frugality is a moral crusade, you'd probably be better served by a thinker like Ramit Sethi whose work focuses on the importance of learning how to spend.

But most of the advice about how to manage financial dysmorphia feels pretty table stakes: Have a financial plan, spend less time on social media. And it's possible that these two tips when actually implemented will work. But this is, like most things, a place where our individual agency must confront a broader culture that is by almost every definition encouraging of excessive over consumption and insatiable desire, which is incidentally the focus of another episode that we're working on right now for a few weeks from now.

In order to assess your own financial situation as insufficient, you have to be getting information about what's “normal” (normal in scare quotes) from somewhere, right? And the entire premise of fields like marketing and sales is usually to instill or stir desire and a feeling of lack in the target audience for a product or a lifestyle such that they feel compelled enough to purchase it or strive for it. And so to feign surprise that we now have a bunch of young people who feel utterly confused about what they should have want or need is a little bit silly. Similarly silly is the notion that simply earning or saving more money is the antidote that'll allow you to sit back and relax.

Giuliana:

I do think that my money dysmorphia definitely got worse when I started earning more, which is not what I was expecting.

Katie:

Giuliana reached out to me and said something that stopped me in my tracks earning more money and thus understanding that she now had the opportunity to build wealth, made her more financially obsessive and anxious.

Giuliana:

I'm Giuliana. I'm 34, and I live in New Jersey.

Katie:

Can you tell me a little bit about your experience of what it sounds like was the goal post moving as you earned more money?

Giuliana:

It's funny because the pressure that I was feeling and the things that I had always been wanting to do with my money to build my financial security, it's not like I was resisting doing that. I really wanted to be saving as much as possible and investing as much as possible.

But I think really what happened was what happens when your body is just under a lot of stress for a long period of time. And when you're in a period of being really under-resourced either financially or emotionally or psychologically, it's like your brain can only process so much and your brain kind of categorizes things by priority level and level of threat.

And so when I was in that really heightened state of, oh my God, I don't know how am I going to build my financial security with the income that I have right now? It pushed a lot of other things to the side, not necessarily because I wanted those things to be to the side, but I could only put one foot in front of the other and focus on that. Otherwise I'd be so overwhelmed.

So it was like the catchup of that, and I think when I was in it, I was expecting that once I make more money, that's going to be the fix. I'm going to move the remove the external stressor and I'm going to be so chill and it's going to be vacations and drinks on me and great la, la, la.

But it just takes your brain a second to catch up to the new reality. And my new reality was yes, I was making more money and had more room in my budget to do everything, but it didn't remove the feelings that had been building up over that period of time. It felt like the pressure kicked up a notch, but I think the pressure had always been there. It's there was only so much that I could do about it until I had the resources to take action and do what I felt the pressure to do.

Katie:

She told me she's been “hoarding her acorns” with the intention of promoting a sense of security, but that she's starting to wonder if maybe this is backfiring a little bit, if instead of making her feel more secure, instead it's just corroborating the belief that she needs to hoard in order to get by.

Giuliana:

So here's a little song and dance that I do pretty much every time I get a paycheck. The days leading up to my paycheck, I'm like, sick. I'm going to invest this amount, it's going to be great. And then that payday comes and I'm like, should I maybe put half of that in my emergency fund even though that is fully funded and is where it needs to be? That knee jerk reaction to just hoard as much as possible is still there because the follow-up thoughts are like, well, what if something terrible happens and my company goes bankrupt? Or what if I needed surgery? Or what if my mom gets sick? Or catastrophe, catastrophe, catastrophe. That feeling of something worse could always happen and it's always going to be more beneficial for me to have liquid available if I need it is still very much present.

It's a delicate balance, but every time I kind of indulge that line of thinking and back it up with a behavior like deciding, no, I'm not going to invest as much, I'm just going to save a little bit more and that'll be fine. I might need it. It's like I'm putting coins in that jukebox that's like singing this song of scarcity and telling me like, oh, something bad could happen. So by engaging with that dialogue, it's reinforcing that there's something to be afraid of, and even denying it also kind of gives that voice a little bit more power.

Katie:

For some people, a simple awareness of this fact will help them keep irrational feelings of inadequacy or desire at bay. For others, more intentional intervention might be necessary. I don't think social media is where these ideas originate, but I can't deny that it does seem to be where they proliferate most easily emerging from the primordial soup of capitalism onto our screens.

After reading countless articles and studies on this subject, I found that three major tips seem to be most frequently recommended:

1)     The first was social media, daily limits of 20 minutes or less, proceeded and followed by journaling about how you feel before and after.

2)     The second was introspection about financial ideas you may have internalized in childhood based on what you heard or observed in your household before the age of 10.

3)     And the third was getting honest about how your social group might be influencing your feelings about yourself and your financial situation and putting some distance between yourself and people who might consistently make you feel inadequate until you can work through those emotions.

On the note of upbringing, some research out of the University of Michigan validates our loose and anecdotal findings in this episode and merges them with a sort of nature nurture combination. The researchers studied children as young as five, and based on their answers, placed them somewhere on the “spendthrift to tightwad” scale, and they found that four times as many children were classified as tightwads than spendthrifts, which according to the researchers also holds true for adults.

That is to say, psychologically, you are four times as likely to associate spending money with emotional pain rather than to lack the sort of emotional brakes that might prevent you from purchasing.

One woman I heard from, Amanda P., told me she considered herself a recovered money dysmorphic and mentioned that a massive amount of introspection allowed her to see her position more clearly.

Amanda P.:

I am a first generation American. Both of my parents are immigrants. They both came here in pursuit of the American dream to participate in this great capitalist experiment as late stage capitalism would refer to it.

At this point, I consider myself either a recovered or perhaps recovering money dysmorphic, but I'm someone who's previously experienced both sides of the dysmorphic spectrum In my adult life, financial literacy in an immigrant community is very heavily focused on making money. If you're busy at work with your labor, then that's really what it means to be successful. I always assumed the future was bright and as long as I was busy, I was successful and could spend money in a discretionary way even when I had no business doing so.

I became really aware of money dysmorphia though because my husband and I came from totally opposite sides of the dysmorphic spectrum. My lived experience was very focused on working hard, building a better tomorrow, always striving for better, and I wanted to spend like it. Meanwhile, my husband was a proponent of the fire movement and was very focused on those principles, which can sometimes be really dysmorphic in the opposite sense. His childhood included utilities being shut off a time or two. So he worked really hard from a very young age to make sure that never happened to him as an adult. In my case, I wanted to replicate my lived experience and in his case, he wanted to overcome it. We almost became like a mirror for one another, which ultimately helped us both identify dysmorphia and work towards a healthier, more balanced financial perspective.

Katie:

So was it the relationship then with him that made you realize that something might need to change that mirror, or was there another catalyst or aha moment that you recognized as a turning point?

Amanda P.:

I think it was really the realization that I was regarding finance as a totally binary thing. It either had to be the way I was raised or the way he was raised, or you either have to save or you either had to spend. And that was really impacting my financial acumen in a negative way. Neither of those extremes are healthy, and seeing myself ping pong back and forth between both sides of the spectrum was a real eyeopener.

I also think a big catalyst for me was owning a business that was very helpful because it forced me to look at a budget really as an implementation of cashflow, not something that's constrained for constraint’s sake. Cashflow ebbs and flows, but being successful is about so much more than that. Once I really started living that mode of thinking as a business owner, I started applying that methodology to my spending at home and not in and of itself garnered improvement to my personal mentality towards money.

Katie:

It sounds like becoming a business owner kind of gave you that on-ramp, and maybe it's more of an off-ramp from toggling between extremes. But would you say that you started with learning how to manage your personal cash flow? I think that there are a lot of people that if you kind of come around to the fact that the way that you're relating to money is not healthy, whether because you have hoarding restrictive tendencies or you have the binging over spending tendencies, or you're someone that might kind of play with fire and jump between those two extremes, I think a lot of people will have that moment of reckoning, but then not really know where to go from there. So I'm curious if you can tell us a little bit more about where you started, where you started untangling all of this.

Amanda P.:

Honestly, at first it was really important to take a break from thinking about it kind of similarly to when you're in a news spiral and you get to that point where you're like, this is too much. It's not making me healthy. So I really kind of worked on doing less in an effort to separate myself from the obsession and just worked on getting back to basics, to your point about managing one's own finances.

So I really focused on learning more and for me, the more I could apply really objective principles to my thought process, the less dysmorphic I felt a time. I remember making really great process to that point is when I got really granular in setting up all of my brokerage and investment accounts. After leaving the corporate world, I no longer had a corporate company that administered any retirement benefits for me.

So I dug into doing that for myself as a business owner and really understanding how to do that both and post-tax. But having insight into the entire investment process from start to finish, I think really gave me the confidence to trust the process rather than obsess over every dollar saved or every dollar spent. So I remember feeling really empowered, understanding what's usually very obfuscated by financial institutions and corporate benefits departments to the point where I remember drawing it out like whiteboarding, okay, and then this is moving here and this is going here. And it was really kind of that moment where I went, okay, I think I get this now. I get how this works functionally, why isn't everybody doing this?

And I think that was the first time in my life that kind of given my background that I went from, well, you make money as being a wage laborer to going, oh wait, this is actually how you can make progress here.

Katie:

It sounds like by your telling that having some objective truths to fall back on kind of cleared the fog, and maybe it was the fogginess or the uncertainty that was allowing your emotions to really take charge. But once you understood what was happening a little bit better, it was easier to sit back and rest on, oh, okay, I understand what's happening here, but were there any setbacks that you experienced after you initially did your whiteboarding session, learned what you needed to learn, set up the brokerage accounts, the pretax, the post-tax. Did you experience any of these same feelings or symptoms after the fact?

Amanda P.:

My setback came from a good place, but ultimately was still not the answer I'd at this point. I'd realized my dysmorphic tendencies, I'd kind of realized that wasn't the way to get ahead, but at this point, see former comments on being a wage laborer, I thought I could just earn my way out of it. So I really overcompensated. I took really being busy to the nth degree and just really burnt myself out. I thought making more money would be the key to overcoming it, but for me, that was actually the time when my dysmorphia flipped to the opposite end of the spectrum, and I became really obsessed with setting it aside and saving for that future thing, whether it was that future retirement or that future house.

I mean, I was practicing healthier financial principles, sure, but I was still obsessing about it, which is really kind of the root of the problem. So I think that was when I really understood deeply that you can't earn or save your way out of money dysmorphia because it's really predicated on the idea that some amount will be enough, enough spent to be happy enough, saved to be happy, and that right there is where the falsehood lies. No amount will ever be enough because it's not about the amount. So once I knew that deeply that it wasn't about what I had or didn't have, it was ultimately about my relationship with money.

Katie:

Really curious how you eventually addressed that obsession even after it kind of mutated into this seemingly better positive on the surface form. And if you can tell me how you feel about money now.

Amanda P.:

That introspection and awareness, that's a very good place to start. Just being able to reflect on how do I feel about money, and not just about money, but how do I feel in relation to both the present and the future? Because that fear, there's so much fear wrapped up in the future, the fear of the unknown, whether or not this monetary system is failing us altogether.

I think educating myself on the systems that we all exist within was really key and eventually led me to realize that this dysmorphia was really as a result of a larger system at play. I mean, the American way of life promotes being over leveraged, like we're supposed to have an unquenchable thirst for consumption, always spending more, always wanting more. So when you make more money, you get a taste of that, and then you just want to keep going.

So if everyone felt like they had enough, though, if we were content, wouldn't behold of late stage capitalism be far less impactful in our lives? So I think that realization that it wasn't my fault, there wasn't anything wrong with me, I was really able to actually finally separate myself from the guilt that our systems created. And I was able to focus on finding balance and some semblance of autonomy within it. Not just what should I be doing? How much money should I be making? But how can I exist on a day-to-day basis and be happy in my life? So from a practical standpoint, I worked towards really practical changes and how I thought about money short, but especially actually how I interacted with it, how I physically was spending it and what I physically was doing it. I knew I wanted it to have less of a hold on me emotionally.

So I wanted to figure out how to kind of automate that in a certain way so that I just stopped thinking about it. So I started focusing on “investing” air quotes in both the future and the present and kind of thinking about it as money has to go towards both. And I mean to the point that my husband and I now have literal investment accounts earmarked as money we can use to enjoy today in addition to the future, just like our accounts that are earmarked for the future. So this one's our 401(k), but this one is, we literally call it our fun bucket. This is for right now. This is something we're going to do to have fun. That's actually been paramount because I can physically see money going to both the present or the future. So I don't feel like either is being sacrificed now. And as far as my feelings about money now, I view money as a tool. It is just a tool. It's really just a tool to help us get where we want to go. I think what the fire community gets really right is that you have to have a plan for the future. But what I think leads to dysmorphia is the focus on the future while depriving oneself today. So the two truths have to exist at the same time. We have to be prepared for the future and we should find joy in our present.

Katie:

What was most interesting was hearing from people who described the ways in which their money psychology upbringings differed from their partners, like Amanda's story illustrated.

One woman wrote in that it's a present dynamic in her marriage saying, “I grew up in the upper middle class and my husband grew up in an immigrant working class family always very hand to mouth. Our combined income puts us solidly upper middle class at the moment. My husband struggles sometimes to understand what normal behavior is for a family in our financial situation, and how would he possibly know what normal retirement saving strategy is or how much is reasonable to spend on an international vacation. No one he knew growing up has ever had a retirement account, let alone flown out of the country for a vacation. None of that is normal.”

She astutely notes that the money instincts you learn when you're poor are very different than those that you internalize when you're middle or upper class. Echoing a sentiment I alluded to earlier, she writes that, “In the logic of his family's economic world, if you happen to have some extra money lying around, you better spend it on something fun quick, counterintuitively, because there will always be another bill to pay around the corner, better get while the getting's good. And because of this, he is way, way more likely to impulse purchase than I am.”

This sort of jumping classes, the very social mobility that is actually fairly rare in the US, despite a pervasive belief to the contrary, introduces all sorts of complications. You must learn a new language and rewire deeply seeded instincts. And for many of us, our parents were the class jumpers and we inherited their beliefs, whether those beliefs were of strident, frugality, spending every penny or something different.

But the opportunity that a recognition of money dysmorphia provides for us is the chance to wipe the slate clean or at least try to and redefine what a healthy and generative relationship to the tool of money looks like.

That's all for this week, and I'll see you in two weeks on the Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer, and additional fact checking comes from Scott Wilson.