Never hesitant to rebrand an existing phenomenon, millennials and their Gen Z frenemies are admitting to having “money dysmorphia” — 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 TikTok-induced anxiety, 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 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 behind financially and 59% of millennials feel the same.
One major shift for both generations compared with previous ones is the constant access to information, both in the news and on social media. Gen Z especially has never lived in a world devoid of a 24/7 news cycle or social platforms and search engines allowing you to fact-check anything in an instant. The eldest members of Gen Z were only 10 when Apple launched the first iPhone. The oldest millennials were 26 — personally, I’d just graduated high school.
Millennials and Gen Zers keep hearing how tough we have it. How hard and expensive it is to buy a home. How much it costs to raise children and secure child care. How big corporations, once seen as beacons for young, ambitious people, are now slashing jobs. These headlines can easily overshadow the reality that the US economy is pretty healthy, at least for now.