When it comes to money, Gen Zers and millennials are insecure. But many of them don't need to be — and that "money dysmorphia" is hurting their financial decisions, according to a recent survey from Credit Karma.
In December, the personal finance company surveyed 1,006 U.S. adults over the age of 19 regarding their attitudes toward money. Their findings:
- Approximately 45% of millennials and Gen Zers are "obsessed with the idea of being rich."
- As such, 48% of Gen Zers feel "behind" financially, along with 59% of millennials.
- Forty-three percent of Gen Zers say they experience "money dysmorphia," alongside 41% of millennials.
- However, 37% of those who self-report the condition have more than $10,000 in savings, and 23% have more than $30,000 in savings. By comparison, the median savings balance for Americans is $5,300.
- Nearly 7 in 10 Americans with money dysmorphia do not believe they will ever be rich, despite a preoccupation with becoming wealthy.
This money dysmorphia has legitimate consequences, according to the survey: 95% of those with the condition say it negatively affects their finances. The pessimistic outlook toward their own wealth capacity has held young people back from building savings, and promoted overspending and debt accumulation.
Social media has contributed to the issue, according to Courtney Alev, consumer financial advocate at Credit Karma. Young people are no longer comparing their successes to those in their immediate circles — they're comparing themselves to the polished, curated grandeur of celebrities and influencers all around the world.
"A lot of people are examining their finances and comparing themselves to their peers, people on social media, and even celebrities, which is bringing up feelings of inadequacy," Ms. Alev said. "This distortion between perception and reality can prevent people from taking steps towards achieving their financial goals."
Financial fear is nothing new, Bloomberg opinion columnist Erin Lowry reported Feb. 6, citing the scarcity mentality that dominated after the Great Depression. Both the Greatest Generation and Generation Z experienced "once in a lifetime," generation-defining events in formative years. COVID-19 has left a lingering sense of insecurity, compounded by frequent talk of impossible housing and child care prices, and the impending doom of large-scale layoffs.
"These headlines can easily overshadow the reality that the US economy is pretty healthy," Ms. Lowry wrote, "at least for now."