The constant stream of idealised life-styles on social media makes young consumers anxious and compels them to overspend. This traps them in a cycle of poor financial decisions and distorted financial reality.
“I empathise with the young, they’re under a lot of pressure,” says Alvin Tan, financial services director at PhillipCapital, as he describes a growing phenomenon of “money dysmorphia” or money disorder, which describes insecurity about one’s financial situation, even if it is stable.
“Online, only the positives are shown. What’s more, if the app picks up, you are interested in a certain brand, and all your content revolves around it, creating the illusion that this sort of content is the norm,” says Tan in an interview with The Edge Singapore.
He cites the recent swell of cryptocurrency influencers as a prime example: “It’s funny when crypto was down, these investors and influencers disappeared for two years. But now that crypto is at a record high, they’ve declared their wins proudly. Social media is fake; winners always appear when the market is up but vanish when it’s down to complete radio silence. The younger generation must know this is happening increasingly.”
More concerning is that money dysmorphia affects those chasing material goals and those serious about managing their finances. It creates financial disillusionment and anxiety about inadequacy in the former.
Financial goals
Tan recalls growing up in the 1980s and 1990s when there were “no questions” in his head that if he studied hard, he would be better financially than his parents. “Likewise, my parents taught me that if I studied hard, I would do well, but I can’t say the same right now. Everyone is studying hard today, but I don’t think this simple strategy can be repeated.”
Previously, individuals had a better chance of achieving financial goals on a base salary from employment without supplementing the retirement pot with investments. According to Tan, the young today must seek out multiple income streams to grow a comparable pool of funds.
People today need to become more financially savvy from a young age and not be unduly influenced by what they see online.
“You have to have a very healthy relationship with money. Does money justify your ends, or does it justify your means? So really, at the end of the day, the journey to understanding how to manage your money is lifelong, and having conversations can help bridge that gap,” adds Tan.
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He suggests that instead of staying anxious or wanting to “get rich quick,” millennials and Gen-Zs should aim for various financial milestones.
Acknowledgement may also be one of the most powerful cures for money dysmorphia. Recognising excessive spending triggers like Fomo (fear of missing out) or adjusting financial goals can be hard but beneficial in the long run.
Determining if someone has overcome money dysmorphia means looking at whether they have moved past old habits, like worrying too much about money or learning to spend and save more wisely.
While social media exacerbates this issue for younger generations, there is no easy fix and its impacts can linger regardless of age.
Tan says: “I think it’s impossible to remedy because we’re humans. We will compare, even if no one is competing with us. It’s unavoidable, and managing these feelings is more important than learning to manage finances immediately.”
He adds: “Take a step back, think about it and realise it’s fine, no one will actively condemn anyone.”
