Cost-of-living crisis ‘has fuelled money dysmorphia’

Money dysmorphia is a term you may have heard quite a bit recently.

It describes the gap between a person’s actual financial situation and how they perceive it.

So some people believe they have less money than they really do, and others are in denial about how much they’re spending.

Christie Cook, a finance expert at Hodge Bank, believes money dysmorphia is, in part, a consequence of the cost-of-living crisis.

Speaking to Sky Money, she said: “People may feel more in control if they put every single pound away in case of emergencies when they already have a savings account that could get them through any unexpected costs.”

Ms Cook said previous financial traumas, such as fraud or bankruptcy, have also led to people feeling anxious about money, even when they’re back in a stable position.

What does money dysmorphia look like?

According to Ms Cook, there are several behaviours that could suggest a person has money dysmorphia, including:

• worrying about money when there’s no immediate danger
• feeling stressed and panicked when you check your bank balance
• feeling guilty about what you’re earning or saving
• self-sabotaging, such as offering to pay for other people even when you can’t afford it
• ignoring bank statements and other financial issues

How to overcome money dysmorphia

“With social media fuelling unrealistic comparisons and constant negative news about the cost-of-living crisis, it's no surprise that many people are experiencing financial anxiety,” Ms Cook said.

However, she believes there are way to overcome it, such as:

• tracking your spending
• not comparing your financial situation to others, such as influencers
• setting up savings pots with different purposes

If you want to prioritise your spending and work out where you can make savings, then we can help you.

We’ve created a free budget planner to get you started, as well as a handy guide to creating a budget.