Money dysmorphia, the experience of believing you’re better or worse off with money than you actually are, greatly impacts young people’s ability to form healthy money habits and set themselves up for financial stability in the future. Of course, amid rising costs and financial inequalities, Gen Z’s money dysmorphia usually comes from feeling uncertain. They don’t believe they’re as financially comfortable as they should be, especially watching influencers and friends flaunt their misguided wealth online.
“You’re in a position where you don’t believe you have enough money, even though the numbers say you’re OK,” financial therapist Aja Evans argues. “It’s easy for people to create a narrative around what they’re seeing online — they’re like, ‘Oh my God, everyone is going away for spring break, I’m the only one who is staying home.'” Of course, many of the signs Gen Z is experiencing money dysmorphia and actually doing better than they think revolves around this constant comparison, rather than an internal sense of stability, knowledge, and financial literacy.
Here are 11 signs Gen Z is experiencing money dysmorphia and actually doing better than they think
1. They’re anxious about the headlines
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Whether it’s doom-and-gloom headlines about tariffs or a looming economic recession, many Gen Zers feel disillusioned by the images of status they’re seeing on social media from friends and the “end of the world” narrative they’re reading about online.
They feel like they need to stay home, stop spending, and take on a mentality of shame around “fun spending” — outside of basic necessities — to feel in control and prepared for whatever is coming their way financially.
Even if their bank accounts are telling them that they’re okay, they feel a constant pressure to do something different: to spend on status trips like a tropical vacation with friends, buy the newest designer bag advertised on TikTok, or even save thousands to account for incoming rising costs, even when nothing in their financial lives has changed yet.
Of course, preparation and a healthy amount of worry about the future, if sometimes necessary or often natural, is one of the signs Gen Z is experiencing money dysmorphia and actually doing better than they think.
They’re aware of what’s going on in the current economy, but still struggling with unpacking and acknowledging the harmfulness of social media in pressuring overconsumption, status symbols, and overspending without reservation.
2. Long-term investments feel like a waste
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Coupled with the “end of the world” narratives many Gen Zers are privy to reading about online, the lack of long-term investments, like homeownership or retirement, seem completely out of reach for many young people.
They’re less likely to save and budget because they don’t have any long-term financial goals. If they’re not already living paycheck-to-paycheck, they’re spending the majority of their money on the present moment, like going out with friends or making their living space more comfortable.
Of course, part of this trend is also fueled by Gen Z values — they care less about the traditional financial goals like homeownership that older generations appreciated, and more about the present moment, building connections, going out, traveling, and making memories today.
3. They spend on little luxuries
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According to a study from the Journal of Behavioral and Experimental Economics, many young people are spending on small things like makeup or skincare items — coined the “Lipstick Effect” — to cope with uncertainty about the world and their financial state.
They feel as though they don’t have anything larger to save for, so they’re spending on small luxuries and status symbols — like makeup, clothing, or even going out to eat — to cope with emotional or worldly anxieties.
In many ways, this is a sign of the money dysmorphia many young people are experiencing. They’ve been largely fed a narrative about their economic status and the inaccessibility of investments, so they feel more pressured to spend their money now, rather than save.
4. They have unrealistic expectations
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Considering Gen Z has more accessibility to unrealistic societal standards and expectations around money on social media compared to older generations at the same age, it’s not surprising that many of them are experiencing money dysmorphia, feeling behind in the face of influencers being gifted designer items and friends quietly taking on debt to fund their Instagram vacations.
Research from CivilScience also suggests that Gen Z has the lowest rates of financial literacy than their older counterparts, meaning they struggle to contextualize their income, spending habits, and future planning, even outside of the pressure from unrealistic expectations online.
5. They downplay their small achievements
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Dealing with unrealistic expectations and standards around money, both from social media and even different generations like their parents, many Gen Zers struggle to celebrate their small financial wins like paying off a credit card or being able to afford an apartment of their own.
They’re so focused on the large-scale narrative that society pushes, like buying homes, starting a family, or getting married, despite being nearly impossible for Gen Z to currently achieve.
Even when they do achieve a goal, they downplay and dismiss it, grappling with anxiety over financial uncertainty, debt, and comparison. Fixated on the big traditional milestones, even if they’re not appropriate, leads to Gen Zers experiencing money dysphoria about their current financial state.
6. Their credit score gives them anxiety
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Like an Experian study on Gen Z suggests, credit scores can be relatively misguided in contextualizing an individual’s financial state. They’re largely impacted by the state of the economy or unemployment, rather than individual choices and freedoms.
Yet, many Gen Zers constantly worry about their credit scores, worried about not being able to get a loan, buy a new car, or get approved for a living space in the future.
While they’re surely important in some contexts — no matter how misguided they may be — credit scores aren’t the only measure of financial success and stability.
Constantly worrying about them is one of the signs Gen Z is experiencing money dysmorphia and may even be doing better than they think, considering they’re one of the things that generally keep people in debt for longer periods of time.
7. They view frugality as failure
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Making frugal choices and crafting frugal money habits feels like a failure for many Gen Zers experiencing money dysphoria, especially when coupled with unrealistic financial expectations from social media.
Shame or embarrassment around truly healthy financial habits like budgeting, saying “no,” and saving money make it hard for them to prioritize their financial well-being, especially when they’re forced to watch their friends and idols spend without reservation online.
Of course, the main theme behind many of the signs Gen Z is experiencing money dysphoria revolve around this disillusionment. The people they’re watching spend seemingly without a second thought aren’t actually as financially free as they claim to be.
Their vacations are going on a credit card, they’re taking loans out for music festivals, and even being gifted the clothes, shoes, and items they’re flaunting on social media.
8. They feel guilty for spending money
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According to a report from Cash App, it’s not entirely uncommon for Gen Z to harbor constant regret and guilt over their spending habits — from basic necessities to larger extravagant purchases. The act of spending money is inherently rooted in shame for many Gen Zers experiencing money dysmorphia, because they feel more behind and uncertain than they believe they should be at their age.
Stuck in a cycle of instant gratification and guilt, these young people often fall into unhealthy spending habits from a young age, unsure of how to break the cycle and adopt better habits.
9. They take on all the blame for financial struggle
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Many Gen Zers who are stuck in a misguided mentality about their financial status don’t fully acknowledge or give grace to the institutional failings contributing to their struggles. From rising costs, to inflationary pressures, and even difficulties in the job market, nothing is as easy as it was for their parents or grandparents. They deserve the grace they’re not awarding themselves.
Especially faced with generational tension and pressure from their parents and family members to be more financially secure — with phrases like “back in my day” or “just get any job” — it’s easy for Gen Zers to struggle with money dysphoria.
After being told hundreds of times that it’s their fault or a fault of their work ethic that they’re financially struggling, it can be hard to look at the bigger picture and acknowledge institutional shifts and failings.
10. They feel pressured to punish themselves for spending
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Budgeting and other financial habits feel like a punishment for many Gen Zers experiencing money dysphoria. They not only resort to many unhealthy money mindsets that revolve around sacrifice, they pressure themselves into restrictive spending habits when they feel insecure or uncertain.
Of course, similar to a restrictive and unhealthy diet, this cycle only leads to more overspending, guilt, and confusion.
11. They struggle to make future plans
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While many Gen Zers are perfectly happy living the present moment and enjoying experiences now with their money, one of the signs that they’re experiencing money dysphoria is their lack of future goals. Not only are they less inclined to put money away in savings accounts, emergency funds, and even retirement plans, they struggle to set financial goals for their future selves.
The Economic Times reported that their financial futures are constantly evolving in front of their eyes, with Gen Zers spending nearly twice of their savings trying to keep up with rising costs and inflation. From struggling to advocate for a higher salary to barely affording basic necessities like groceries, it’s much harder for them to envision a future of financial stability when they’re stuck in a state of constant financial stress now.
For some, this worry and anxiety is well-founded, but it’s also a component of money dysmorphia. They believe it’s their fault they’re falling behind financially, when truly, it’s institutional failings that are making things worse for them.
Part of this dysphoria lies in the “blame game” — they guilt themselves for spending money or not making enough, which only pushes them further into a cycle of shame-driven spending, instant gratification, and uncertainty.
Zayda Slabbekoorn is a staff writer with a bachelor’s degree in social relations & policy and gender studies who focuses on psychology, relationships, self-help, and human interest stories.
