Extensive evidence points to social media having a detrimental effect on individuals' self-esteem. This impact extends beyond appearance and social status to encompass financial well-being and economic standing. A recent report by Credit Karma introduces the term "money dysmorphia" to describe the distorted perception of finances experienced by nearly one-third of Americans, often due to comparisons with others and feelings of inadequacy. This phenomenon is particularly prevalent among younger generations, with approximately 43% of Gen Z and 41% of millennials struggling with financial comparisons.
According to Credit Karma, individuals experiencing money dysmorphia often have above-average savings but are also fixated on the concept of wealth. This creates a significant gap between perception and reality. Additionally, a separate report by Edelman Financial Engines indicates that only 14% of Americans consider themselves wealthy, despite a substantial increase in the average household's net worth in recent years. The study also highlights the overwhelming influence of social media on individuals' financial well-being, demonstrating a strong correlation between negative money perceptions and increased time spent on social platforms.
Moreover, the pressure to compete with the "digital Joneses" on social media can lead to overspending on luxury items, vacations, or home improvements. A recommendation from experts in the field includes reducing social media usage and implementing purchasing hurdles to encourage deliberate buying decisions. The emphasis is placed on addressing the underlying financial psychology, with an emphasis on finding happiness beyond material possessions.