Gen Z has more job flexibility and access to information about money than their parents did. Still, not everyone feels good about their financial futures.In fact, Gen Zers — people born between 1997 and 2012 — are more worried about saving than any other generation, a BI survey showed. And not all of it is tied to inflation or student loan debt.Money dysmorphia is “a negative and unrealistic perception of one’s financial wellness or financial position,” Amanda Clayman, a financial therapist who hosts Fresh Produce Media’s Audible series “Emotional Investment,” told Business Insider. Nearly half of Gen Zers and millennials have it, according to a recent Credit Karma survey.Money dysmorphia goes beyond wanting to pay off some credit card debt or to contribute more to a 401(k). It’s “pervasive worry, vigilance — like an internalized feeling of unsafety with money,” Clayman said, even when there aren’t pressing financial problems to solve.Clayman explained why younger generations are more likely to experience warped views around their finances — and might be more financially stable than they give themselves credit for.Big life transitions bring on introspectionIn general, Clayman said that people who are prone to catastrophizing will “find that money is something that is very easy to worry about.”
Younger people, such as those in their mid-20s to mid-30s, are also going through more life transitions, she said. They might be saving up for a wedding, house, career change, or family.While all these things are a rite of passage, Clayman said “older generations were working, in many cases, in a different environmental context, financially.” Budgeting was simpler before the clutter of Venmo and credit card points.Young people might also not have a clear barometer of how much they have to have saved up, other than a lot. Clayman said that the more ambiguous or abstract a financial goal is, the easier it is to feel like you’re nowhere near the goalpost.”Once you’re in a later stage of life, you have a little bit more information that you can access,” she said. Older generations have more life experience, making them less likely to experience unwarranted panic about their money.Self-comparison fuels money dysmorphiaPrevious generations also didn’t contend with the warping powers of social media. It’s easy for younger people to create nebulous financial benchmarks when their online activity fuels so much self-comparison, Clayman said.”We can never know all of the intimate details of a person’s financial picture and their history,” she said. “We are creating a pattern that tells a story based on the incomplete information that we’re picking up.”That couple with the dream wedding could be in credit card debt. That friend who goes on four international trips a year could have a trust fund.Plus, because high social media use is linked to lower moods, those who spend more time on TikTok might be served more content that confirms their negative self-belief, Clayman said. “All we have to do is open Instagram and be flooded with confirmation that there are lots of people out there who are having fun and going places.”Constantly being bombarded with images of luxury restaurants and impeccable homes can perpetuate a cycle of undue worry and doubt about one’s own finances.Some expectations around money are datedWhile parents can teach their kids valuable lessons about saving, not all the money rules that pertained to Gen Xers and boomers translate to today’s economy.For example, generations growing up in the post-war era had pension plans, while retirement is self-funded now, Clayman said. Plus, factors like inflation and higher cost of living can make it harder for younger people to stick to strict saving schedules.It’s not to say that all past advice about money is wrong, she said. But if following it leads to adopting behaviors like money-hoarding or workaholism, it does more harm than good.These behaviors “are an attempt to feel better and to quiet the level of anxiety that we’re experiencing,” Clayman said. The more productive route is taking in different financial perspectives and making a plan to budget — one that is realistic and shame-free.
