A recent study of financial health has revealed an interesting psychological problem named “money dysmorphia” which shares many similarities with clinical body dysmorphia.
It is a concept that has not yet received formal recognition by the medical community, and it is about a person’s abnormal perception of their financial condition that leads to wrong choices on money and raises broader mental issues.
Ali Katz, a renowned estate attorney and founder of the Family Wealth Planning Institute, addressed this intriguing discovery.
She compared this with a warped lens through which people view money, which often results in reckless spending habits and poor financial decisions.
Money Dysmorphia is similar to the Body Dysmorphic Disorder (BDD) in that they are both related to perceived physical defects.
This widespread financial delusion can therefore have serious consequences for an individual’s economic decisions as well as his or her general psychological well-being.
According to certified financial therapist and planner Elana Feinsmith, such beliefs are known as “money scripts”, that are subconscious beliefs rooted in childhood experiences.
Financial behaviors are largely influenced by these scripts including thoughts like ‘I am poor,’ ‘I am rich,’ ‘I have enough’ or ‘I don’t have enough’.
One form of money dysmorphia happens when individuals feel they do not possess enough funds because of early money-related traumas or false learned beliefs.
Of importance here is that such attitudes result from family experiences during early childhood years related to money.
The consequence of this distorted perception often leads to financial avoidance behaviours, leaving individuals unable to face these economic situations head-on.
Feinsmith warned against shunning away from reviewing one’s financial position as it could lead to lost opportunities, major monetary mistakes, and long-term losses even if someone is rich.
It is important to note that such perceptions can however hinder essential steps in financial planning process including investing or estate planning.
This may be attributed to a belief among individuals who think they lack sufficient funds for investment purposes or securing the future generation hence perpetuating the cycle of poverty.
But amidst these perceptions, The World Economic Forum reports that 85% of the global population lives on less than $30 per day indicating a clear distinction between how things seem and actual realities.
As Katz noted, such popular figures like Jeff Bezos and Elon Musk have an irrational way of making one feel poor.
However, trying to challenge these entrenched fears and beliefs concerning money is overwhelming.
Even though there are advice on how to save automatically or maximize the retirement accounts, people with money dysmorphia often find it difficult to follow them due to fear of financial insufficiency or possible loss in investments.
Feinsmith indicated that 90% of financial decisions are emotional rather than rational. This emotional connection based on the fear of losing money could hamper effective wealth management or retirement planning efforts.
Nonetheless, professionals like financial therapists can help individuals overcome these fears and reshape their perspectives.
According to Feinsmith, counseling is important for admitting that there are fears of this nature and knowing how those fears could be reduced from nebulous economic worries into something that can be handled.
The analysis of tangible facts normally empowers people reducing the power of money dysmorphia over them.
In collaboration with financial therapists, a person becomes confident about this problem, learns that his/her concerns are usually exaggerated and identifies some steps leading to personal finance well-being.
Thus, Money Dysmorphia represents a psychological barrier to financial health fueled by deeply ingrained childhood convictions.
This condition requires acceptance of these rooted beliefs, seeking professional advice and confronting the truth about one’s financial situation.
By doing this they can break free from their own lies and move towards economic empowerment and safety.