Overwhelming evidence suggests that social media has a negative impact on self-esteem.
This applies not only to how people feel about their appearance and social status, but also to their financial well-being and economic status.
The new term “financial dysmorphia” describes the distorted view of one’s finances that nearly one-third of Americans, or 29%, say they currently experience, according to a recent report. It is intended to explain. credit karmais often caused by comparing one’s financial situation to that of others and feeling inadequate.
“Money dysmorphia is like a modern-day version of Keeping Up with the Joneses,” said Courtney Alleb, consumer finance advocate at Credit Karma.
Unsurprisingly, Credit Karma says that money-related dysmorphia is even more prevalent among younger generations. Approximately 43% of Gen Z and 41% of Millennials struggle with comparisons and feel financially behind.
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“This has been an issue for a very long time, but social media has taken it to a whole new level,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. he said.
Many people experiencing financial dysmorphia have above-average savings. CI also found redit karma. But they’re also more likely to admit to being obsessed with the idea of getting rich.
Alev says there is a “distortion between perception and reality.”
Only 14% of Americans consider themselves wealthy
Another report from Edelman Financial Engines found that the feeling of being wealthy is becoming increasingly elusive, regardless of how much money you have.
According to , the average household’s net worth has skyrocketed in recent years, increasing by 37% between 2019 and 2022. Federal Reserve Survey of Consumer Finances.
Still, only 14% of Americans consider themselves wealthy, according to Edelman Financial Engines, and that hurdle is becoming increasingly out of reach. In fact, more than half of Americans earning more than $100,000 a year say they live paycheck to paycheck, another Lending Club report found.
A prolonged period of high inflation and volatility has eroded the purchasing power and confidence of most consumers. Instagram also bears some of the blame.
“What we found is that there is a correlation between feeling bad about your money situation and time spent on social media,” said Isabel Barrow, director of financial planning at Edelman Financial Engines. There was a very strong correlation between the two.”
A survey by Edelman Financial Engines also found that about a quarter of consumers feel less satisfied with their money because of social media. So the pressure to keep up with the “digital Joneses” may even lead some people to overspend on big-ticket items like vacations, home renovations, and luxury items.
Barrow recently deleted her Instagram account, but it’s kept online to reduce the amount of time she spends on social media and create “buying hurdles” that force her to think twice about purchasing decisions. Advising others to delete all payment information.
“Sometimes you have to put up the guardrails yourself,” she says.
Next, mention financial psychology, added McClanahan, who is also a member of CNBC’s advisory council.
“There’s this perception that you have to think of yourself as successful and that means you have an expensive watch or a nice car, but that’s simply not true,” she says. “You have to make sure you’re happy. Something isn’t going to make you happy.”
