I’m an Expert Wealth Planner: Here’s How ‘Money Dysmorphia’ Could Be Keeping You From Getting Rich
Written by
Dawn Allcot
Edited by
Nicholas Morine
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There’s a new word for an old set of emotions and behaviors many people experience surrounding money: “money dysmorphia.”
The term relates to the concept of feeling insecure, to the point of obsession. Most frequently used in a clinical setting to relate to the physical body, body dysmorphia, or Body Dysmorphic Disorder (BDD), is a diagnosed mental health condition. A patient with BDD exhibits distress due to a real or perceived physical anomaly. BDD can wreak havoc with self-esteem, relationships, and overall health. The term appears in the DSM-5, a book that medical and mental health professionals use to diagnose patients.
Although not recognized by medical professionals as a clinical diagnosis, the related concept of money dysmorphia holds some weight and may be quite damaging for those experiencing it.
Ali Katz, an estate lawyer and founder of the Family Wealth Planning Institute, recently shed light on the topic in an article published by CNBC. “It’s a distorted view that we have around money that causes us to make poor decisions,” she told CNBC.
How Childhood Money Scripts Can Lead to Money Dysmorphia
In an exclusive Zoom interview with GOBankingRates, Elana Feinsmith — a certified financial therapist, certified financial planner and money coach at oakfinancialcoaching.com — used the term “money scripts” to describe these kinds of issues. “We really are talking about the subconscious scripts that we have in our minds — whether that script is, ‘I’m poor,’ or ‘I’m wealthy’ or ‘I don’t have enough’ or ‘I do have enough,'” she said.
If you believe you have more money than you need, and that perception doesn’t meet reality, it could lead to overspending. But, more frequently, money dysmorphia comes in the form of people feeling as if they don’t have enough money. It’s often related to childhood trauma surrounding money or false beliefs and money scripts you learned growing up.
“It’s a disconnect surrounding your finances — what your finances really are versus how you act,” Feinsmith said. “This often comes from what you saw modeled when you were a child, especially between one and eight years old… What did your parents and grandparents say about money? People continue to replay all of that in their heads.”
Money Dysmorphia and Financial Avoidance
Feinsmith said that when people feel uncomfortable with their financial situation without acknowledging and addressing it, they often exhibit avoidance behaviors, which are counterproductive.
“They’re just not willing to look at their finances,” she said. “They are afraid that if they do look at them, they’ll have to grapple with difficult negative feelings on top of a hopeless situation. There are all sorts of feelings that come up.”
But failing to review your finances can have severe consequences, from missed opportunities to huge financial mistakes and losses. And it can happen whether you are making millions or just getting by.
Most notably, money dysmorphia stops people from investing or estate planning, Katz told CNBC. People may wait until they are “wealthy” because they don’t believe they have enough money to invest or worry about preserving for future heirs.
However, 85% of the world lives on less than $30 a day, according to data from The World Economic Forum.
“We’re so wealthy, we’re so rich comparatively, but then of course we’re comparing ourselves to Jeff Bezos and Elon Musk,” Katz told CNBC.
Overcoming Fears Around Money
While it’s easy to read articles telling you to invest a portion of your paycheck automatically into a high-yield savings account or to max out your 401(k), feeling as if you can do so without leaving yourself short can be a tall order.
You may have generations of programming — money scripts — making you feel as if you need to be wealthy or hit some magical income marker before you can start investing. Even knowing the power of compound interest, people might be afraid to automate their savings. They might also fear that they could lose their money in investments, rather than seeing it grow.
“Ninety percent of financial decisions are emotional. We are emotional beings who think — not thinking beings who are emotional,” Feinsmith emphasized.
You could have millions of dollars, but a fear that you could lose it all. If these emotions surrounding money are preventing you from saving for retirement or even managing your wealth effectively, there are professionals who can help, Feinsmith said.
“You may want to talk to a financial therapist who can provide counseling around money, to help you acknowledge and overcome those fears. When clients look at their finances with me,” she said, “we can change the scary unknowns into tangible facts that we can address.”
Reviewing the facts can provide empowerment, which may help diminish any money dysmorphia. “We frequently find their fears are overblown, and we also identify actions they can take, which helps them feel empowered,” Feinsmith concluded.
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