Representatives of Generation Z (born 1995-2010) and millennials (born 1982-1995) suffer from distorted financial perceptions, a phenomenon that could be called “money body dysmorphia,” Bloomberg reports citing a study by the American financial company Credit Karma.
According to Credit Karma’s study
About 43% of Generation Z and 41% of millennials reported having an inaccurate view of their finances. 48% of Generation Z said they feel behind financially, even more among millennials – 59% feel this way.
As Bloomberg notes, “money dysmorphia” can lead people to make poor financial decisions. Another problem is the constant information flow – on one hand, people hear about the high costs of buying a home or raising children, but on the other hand, they scroll through social media and see some flaunting an opulent lifestyle. This evokes fears of not having enough money and a desire to get rich quick.
The young people polled by Credit Karma seem to struggle to reconcile the gap between their economic realities and aspirations, skewing their financial perceptions. This distorted view, dubbed “money body dysmorphia” by the researchers, could lead them to make financial choices that overextend their budgets.
As millennials enter their peak earning years later than prior generations, quelling expectations shaped by realizing others’ conspicuous consumption on social media proves a challenge. Until wages catch up to expenses, this peer pressure by proxy may fuel risky financial decisions.