Money Rehab with Nicole Lapin - Suffering From "Money Dysmorphia?" Heres How To Cure It

Episode Date: July 25, 2024

A recent study done by Credit Karma found that nearly one-third of Americans grapple with money dysmorphia— a state of distorted perception of one's financial health, caused by the relentless comparison with depictions of wealth online. Today, Nicole unpacks the biggest source of this condition and how we can cure it ourselves. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Brokerage services for alternative assets are offered by Dalmore Group, LLC, member FINRA & SIPC. Brokerage services for treasury accounts offering 6-month T-Bills are offered by Jiko Securities, Inc., member FINRA & SIPC. Banking services are offered by Jiko Bank, a division of Mid-Central National Bank. Securities investments: Not FDIC Insured; No Bank Guarantee; May Lose Value.  Brokerage services for Regulation A securities are offered through Dalmore Group, LLC, member FINRA & SIPC. Risks at public.com/disclosures/alts-risk-and-conflict-of-interest-disclosure See public.com/#disclosures-main for more information.

I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start, or even too complicated, if, say, you want to put your summer home in Maine on Airbnb, but you live full-time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you.

I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no

maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits

apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Measuring financial success against someone else's benchmark is not a new phenomenon. We humans have been doing that forever. Just for example, the phrase keeping up with the Joneses has actually been around since the early 1900s. But even though it's not new, it certainly has gotten worse because of social media. Last year, Intuit put out a study that found one in two Americans feel less prosperous compared to others. And an even

larger group says that social media specifically makes them feel like they're falling behind with their financial goals. I think to some extent we are all feeling this, but it seems to be hitting Gen Z particularly hard, especially when it comes to debt. 64% of Gen Zers say they'd rather talk to their family about their dating life than their debt. And 66% say they tell their friends more about their sex lives than their debt. The numbers are clear. Social media is fueling fin-security or insecurity. And as a result, there's a new psychological phenomenon that's taking hold of our collective psyche. Money dysmorphia, a state of distorted perception of one's financial health caused by the relentless comparison of depictions of wealth

online, often adding up to feelings of inadequacy. A recent study by Credit Karma found that nearly one third of Americans grapple with money dysmorphia. Have you ever felt this way? I know I certainly have, because interestingly, even rich bitches get money dysmorphia. This isn't an experience reserved for people who are struggling financially. People who have above average savings with a good salary are also susceptible to this kind of thinking. Only 14 percent of Americans consider themselves wealthy, but over 33% of Americans make over $100,000 a year, which is the common

price tag people put on wealth. The difference between the 33% of people who actually make that six-figure salary and the just 14% of people who consider themselves rich highlights the break between financial reality and perception. This gap certainly hasn't been helped by the economic challenges we've seen over the past few years. The super high inflation rate especially has worn away at consumer confidence and purchasing power, which is basically a jargony way to say how the average American feels about their ability to buy what they need and want. And let me just say that I know if you're struggling financially, it is super frustrating to hear that people making over $100K just aren't feeling wealthy. But to be clear, that is just an example I'm using to illustrate how money

dysmorphia can really warp your sense of reality. Money dysmorphia isn't only experienced by upper middle class people who want to feel like they're part of the 1%. If you're living paycheck to paycheck and feel inferior to someone wearing a Rolex on TikTok, that is money dysmorphia as well. And just like body dysmorphia, money dysmorphia is a toxic way of thinking and can lead to people chasing flimsy shows of wealth at the cost of real financial stability. In other words, this problem goes far beyond the feelings of inadequacy. Some people act on it, which is really where you can hurt your financial future. I have seen this firsthand. I know people personally who have spent way more than they can afford on luxury vacations, designer clothes, all the things because they just want to look rich to other

people. There's even a photography studio that has a set built to look like the inside of a private jet where you can take photos for just $64 an hour. The fact that this kind of business even exists is a byproduct of how pervasive this mindset has become. This is, in effect, the opposite of living within your means or below your means. This is living and spending way above your means. And when someone tries to spend money they just don't have, they turn to their credit card, which can get into a scary spiral of debt. Or worse, it can turn into an addiction or financial crime. I've talked to a few cast members of the Real Housewives franchise on this show,

like Brandi Glanville and Kelly Ben-Simon, and I've asked them why so many Real Housewives alums commit financial crimes. Crimes. Like Jen Shaw, who is currently serving time for conspiracy to commit wire fraud. Or Teresa Giudice, who served 11 months in prison for fraud. Both Brandi and Kelly told me that they thought these financial crimes were motivated by the desire to accumulate more money by any means necessary to keep up with appearances, aka money dysmorphia. We cannot forget that Instagram, TikTok are so curated. People are posting, quote, hashtag wanderlust vacation pics, posing in front of fancy cars, the view from the front row seat at a concert. The content that makes a grid is just a highlight reel. We know this by now. It is so rare to see someone actually being honest on social media, even if they're talking about having a bad day or a failure. I find it so often to be

an ulterior motive there, or it ends up being a backhanded compliment to themselves, like an entrepreneur talking about the time they failed, only so that they can talk about how much of a success they turned into. Some people have been honestly opening up on social media about hard moments they've had. I've tried to do this myself. But I feel like it's a more complicated problem that there simply isn't enough representation of normalcy on social media. As I've said before, comparison has always been the thief of joy. Measuring our financial lives against the financial lives of our peers is not a new thing. But it used to be easier to escape. 50 years ago, you could go see a movie where James Bond

was driving around in an Aston Martin, and maybe you'd feel a little ping of jealousy, but then you'd go home. And there was a physical barrier from those intruding thoughts. Because typically, neighborhoods are flat socioeconomically. Home prices will vary a bit within one neighborhood, but that range will be pretty small. The home prices in Calabasas, California and Castine, Maine are very different. But all of the home prices in Castine, Maine are relatively close in price. And all of the home prices in Calabasas all are pretty close in price as well. They're all pretty freaking expensive, but they all fall into a pretty narrow range. So 50 years ago, if you were at home in Cassidene, Maine, you wouldn't be confronted with Calabasas like wealth when you were sitting at home on your couch. But social

media has brought this standard home with you. It has also made exposure to luxury content constant, and it is totally distorting what we perceive as normal. Private jets are not normal. Private jets are also not what we should be aspiring to. Instagram makes us obsessed with spending when we should be obsessed with wealth, which you do not get from acting like you're rich. You do get by being rich. When we want to map out our financial goals, we should go to our broker jobs, not to Instagram. For today's tip, you can take straight to the bank. If you feel like you need a digital diet,

you can always set a timer on Instagram that will give you a little pop-up notification if you've scrolled past your time limit for a given day. I've set a 20-minute time limit for myself in the past, and I'll be honest, I often ignore that timer. But on the days when I could and I did put my phone away, it felt pretty damn good. I love hosting on Airbnb.

It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start, or even too complicated, if, say, you want to put your summer home in Maine on Airbnb, but you live full-time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for,

like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host, so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future

and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a time checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime.

Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N. I'm your host, Nicole Lappin. Go to chime.com slash disclosures for details. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do.

So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.