Way back in January 2012, I had an opportunity as a brand new husband to step up for my bride. Katelynn and I had gotten married in December 2011, just a couple weeks after she had graduated from college. She knew she had racked up some student debt over the past 4.5 years, but as is typical for students, she had no idea how much.
The great Unknown Number, she was sure, threatened to absolutely destroy us. Our newborn marriage would face its first great trial as we grappled with the huge chunk the minimum payment was going to take out of our fledgling incomes.
Katelynn was so anxious to look it up that I decided to step in and take the initial hit for her. I anxiously logged in to the Department of Education website, put in all the information Katelynn had entrusted to me, and clicked the button, finally turning to face this monster we had been running from for years.
And it wasn’t that bad.
In fact, we realized we had the power to slay that monster pretty fast. Katelynn had built up a good chunk of savings working as a part-time programmer (totally killing it) all through college. We paid off her student loans no less than ten months later.
Not only were we doing okay financially, we were thriving. So why was Katelynn so anxious about facing reality? Because she was suffering from money dysmorphia.
What is money dysmorphia?
Money dysmorphia is a new term for a very old feeling. It describes a mismatch between how you’re doing financially, and how you feel you’re doing financially. And in today’s environment, that usually means you feel like you’re much worse off than you actually are.
(This here is the internet, so we should be crystal clear: money dysmorphia is not a medical term or a diagnosis. It developed in social media channels in late 2023 and became popular because it resonates with so many people. I’m no doctor, but I do care deeply about helping you mend your relationship with money.)
The problem isn’t just increased anxiety (though that’s a big enough problem on its own!). Money dysmorphia is affecting people’s spending decisions and holding them back from taking steps to improve their finances. Some have reported spending more on things they don’t value, because they are convinced pursuing larger financial goals is hopeless.
Young people are the hardest hit.
It’s an unsettled feeling that is disproportionately affecting younger people. Credit Karma surveyed just over 1,000 US adults in January 2024 and found that 43% of Gen Z and 41% of Millennials experience money dysmorphia. That’s compared to only 25% of Gen Xers and 14% of people aged 59 and older. A whopping 59% of Millennials are feeling behind financially.
What’s driving this trend? There is almost certainly a connection to social media culture. Scrolling through an endless feed of influencers shouting about their luxurious lifestyles doesn’t help. Or maybe it’s just your friend who is going on vacation for what feels like the thousandth time! Comparison certainly is the thief of joy.
Listen to what YNAB founder, Jesse Mecham, has to say about the difference between lifestyle creep and lifestyle improvement on the Rich Habits podcast. Mind blown.
But some of it is certainly grounded in the economic uncertainty we are living in today. The New York Times reported that a cooling job market, high student loan debt, and the high cost of housing and childcare is making it hard for younger generations to feel hopeful about reaching the same financial milestones their parents had.
But those suffering from money dysmorphia report that the feeling is deeper than wishing they could buy a house or go on vacation. It’s a pernicious, unsettled feeling around money, like something is wrong but you can’t identify what it is. It’s an impossibly dark, shapeless specter that nevertheless feels all-too-real.
Like a monster in the closet, all you need to do to dispel the fear is to turn on the light. But so many are too afraid to reach for the light switch, or they don’t know how.
The YNAB Method karate-chops uncertainty
A lot of ink has been spilled over this topic. But while many of the money dysmorphia articles out there are quick to describe the problem, very few offer a solution. And those that do offer glib, overused advice about limiting social media or opening a series of savings accounts. For a problem this destructive, we need a proven, systematic solution.
Fear not! The YNAB Method is here, that tried and true friend in your corner. Following YNAB’s Four Rules will ground you in reality and help you work toward becoming more stable, resilient, and creative with your financial life.
But most importantly, YNAB will lead you to a life-long practice that helps you discover what you actually want out of life. Your categories are a reflection of your values. Your YNAB is a reflection of you.
This is the ultimate solution to money dysmorphia, first because it cuts out comparison. You’ll know what you want, because you’ve looked internally, not because someone else has set goals for you. And once you know what you want, you can chart a path toward achieving it by funneling more money toward the things you do care about and less toward the things you don’t.
Give every dollar a job
How are we going to do this? By giving every dollar a job. This is the central pillar of the YNAB Method. Very simply, you’re going to give every dollar that you have in your accounts a very specific purpose. You’re going to plan your spending before you spend. And when you do, your most important priorities will reveal themselves to you.
To get started, I’m going to ask you to do something pretty hard. Face that monster you have been running from, possibly for your whole life. Check in with the reality of your financial situation rather than believing all the negative self-talk you’ve been operating under before now. Face reality and find (I hope!) that it’s not as bad as you think!
First, write down anything and everything you spend money on. Include your monthly bills and expenses, but also non-monthly needs like your once-a-year Amazon Prime subscription or your variable car maintenance costs. Break those down into monthly amounts so you can start treating them like monthly bills. You’ll be prepared next time these former surprises come around.
Second, figure out exactly how much money you have! I’m not talking about the money you expect in your next paycheck. Only consider the money you have right now. Checking, savings, cash under your mattress—add up everything you have and place it in one digital (or literal) pile. This number may give you a degree of comfort or it may freak you out! But remember, we’ve been running on (bad) vibes for too long. It’s time to face reality.
Next, take a breath. If you’ve been cowering in a dark room for a long time, take a moment to look around. You’ve turned on the light maybe for the first time, and I’ll bet that monster in the closet was nothing more than your oversized winter coat.
Hopefully, these first steps have gone a long way to dispel the fear. You’ve set the stage for a new practice that will help you uncover your true priorities and break the curse of money dysmorphia.
Last thing: Give every dollar a job. That means you should literally assign every dollar you have to upcoming expenses for this month or future months. Ask yourself “What does this money need to do before I get paid again?” and divvy up your money accordingly. $400 to groceries, $1,200 to the rent, $50 to Christmas, all the way down the list.
Embrace the scarcity of your money
Depending on your expenses and how much money you have right now, you may not be able to cover all your expenses for an entire month. That’s when you’ll be tempted to add some expected future income into your plan. But don’t do it! This is where the magic happens.
If you walk past zero, you’ll step right back into dysmorphia mode, because you’ll fail to embrace the scarcity of your money. But if you stop when you’ve given every dollar you have a job (and no more), your priorities will rise to the top. You’ll discover what’s actually most important to you. The rest can wait until you get paid again.
Plus, you’ll have a spending plan based in reality that you can actually use to guide your spending from here on out.
And because you’re just planning spending rather than actually spending, you can still be flexible. If three weeks from now you need to make a change, guess what? You can and you should! Changing the job of your dollars is still giving every dollar a job, just a different one than you did before.
If you do have enough money to cover the rest of this month’s priorities, start thinking about next month and set money aside there. Over time, you’ll get further and further ahead. We want you to assign money not only for this month’s expenses and savings needs, but next month’s as well. Eventually, you’ll get a whole month ahead and live on last month’s income. Think of all the things you could do with that much time and space in your finances!
Do it over and over again.
Give every dollar a job, and you’ll have a plan based in reality. You’ll discover your most important priorities in the present moment. But it doesn’t stop there.
Giving every dollar a job is a continuous—dare I say joyful—practice. Every time more money enters your life, do it again. As you do, you’ll discover and reinforce over and over what is most important to you. You’ll stop looking to social media influencers to tell you what your life should look like and start looking to yourself.
Your money is you. It’s nothing more and nothing less than a way to store all the effort, all the passion, and all the energy that went into earning that money. You’ve spent part of yourself earning that money, so what are you going to turn it back into? There is not a single person in the world who knows how you should answer that question better than you.
Money dysmorphia flows from not knowing what you want out of life. That’s a tragedy! But following the YNAB Method will help you discover what you want your money to do. Just you wait and see: you’ll uncover who you want to be in the process.
There’s no better way to start your YNAB practice than with the YNAB money app. It’s free for 34 days. We’ll help you discover the cost to be you, how much money you have, and what you want to do with it.
