The rise of social media has brought about a myriad of changes in society, one of which is the negative impact it has on individuals’ self-esteem, particularly in terms of financial wellbeing. This phenomenon has been termed “money dysmorphia” and is a distorted view of one’s finances, fueled by comparisons to others and feelings of inadequacy.
One interesting finding is that money dysmorphia is more prevalent among younger generations, with roughly 43% of Gen Z and 41% of millennials struggling with comparisons to others and feeling behind financially. The pressure to keep up with the “digital Joneses” is exacerbated by social media, leading to unrealistic expectations and dissatisfaction with one’s financial situation.
Despite the prevalence of money dysmorphia, many individuals who experience this phenomenon actually have above-average savings. However, they are also more likely to be obsessed with the idea of being rich, highlighting the distortion between perception and reality when it comes to finances. This sense of inadequacy is further perpetuated by the depiction of wealth and luxury on platforms like Instagram.
A separate report by Edelman Financial Engines found that the feeling of being well off is increasingly elusive, regardless of one’s actual financial standing. This is reflected in the fact that only 14% of Americans consider themselves wealthy, even as household net worth has risen significantly in recent years. The bar for financial success continues to be raised, making it difficult for individuals to feel satisfied with their financial situation.
The impact of social media on financial wellbeing goes beyond feelings of inadequacy and comparison. Studies have shown that roughly one-quarter of consumers feel less satisfied with their money due to social media, leading some to overspend on big-ticket items in an effort to keep up with their online peers. The pressure to maintain a certain lifestyle portrayed on social media can contribute to financial instability and a reliance on credit to fund purchases.
To combat the negative impact of social media on financial wellbeing, experts recommend taking practical steps to limit exposure and mitigate the influence of online platforms. This includes reducing the amount of time spent on social media, removing payment details stored online, and creating “purchase hurdles” that encourage thoughtful buying decisions. By setting up financial guardrails and addressing the psychological aspect of money management, individuals can work towards achieving greater financial stability and satisfaction.
The pervasive influence of social media has had a detrimental effect on individuals’ financial wellbeing, leading to feelings of inadequacy, comparison, and overspending. Recognizing the impact of money dysmorphia and taking proactive steps to combat its effects is crucial in preserving financial stability and achieving a healthy relationship with money in the digital age.
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