Money Dysmorphia: When Your CFO Thinks $9m Is $3m [US]
Financial planners are seeing something odd. Clients with substantial net worth who genuinely believe they're broke. High earners paralysed by spending decisions despite healthy cashflow. Retirees with seven-figure portfolios refusing to touch their savings.
This is money dysmorphia: your perception of financial reality doesn't match the actual numbers. It's behavioural, not mathematical.
"I had a client who thought his net worth was $3 million," says Sarah Maitre, CFP at Camriel Advisors in California. "We dug in and realised his net worth was actually $9 million." She estimates three-quarters of her clients show some version of this disconnect.
Joy Slabaugh, CFP and financial therapist in Massachusetts, sees it at the extremes. "Folks with tens of millions of dollars who legitimately believe they're poor." The reverse happens too: sudden windfalls leading to lavish spending without the underlying means to sustain it.
The Numbers
A December 2023 Credit Karma survey found 29% of US consumers report money dysmorphia. Among younger cohorts, it's worse: 43% of Gen Z and 41% of millennials affected, with 95% saying it harms their finances. Separately, 51% of earners above $100k live paycheck-to-paycheck, suggesting widespread perceptual gaps.
Why It Matters for Practitioners
This isn't about irrational clients being difficult. Money attitudes stem from upbringing, past financial trauma, and comparison culture amplified by social media. Pre-internet, you compared yourself to neighbours. Now you compare yourself to everyone you've ever met, plus strangers.
"Social media has really made the distance smaller," says Naima Bush, CFP in New York. "We open our phone and see someone doing that and we're like, 'Oh, we can obtain this kind of success.'" Proximity bias kicks in. If your feed is affluent, you assume everyone is.
For CFOs, this shows up in teams feeling financially insecure despite stable employment and competitive pay. For accountants advising clients, it manifests as overspending to maintain appearances or extreme cash hoarding despite strong balance sheets.
What Actually Helps
Run the numbers. Show them. Keep showing them. Kaylee McClellan, CFP in Minnesota, frames it as rewiring: "What is the source of this, and how do we start to rewire our brains to think about it differently?"
Slabaugh's advice: "When your trusted financial professional says you're in good shape, try to really listen to them." The stress is real even when the numbers aren't.
Not every conservative approach is dysmorphia. Stress-saving after economic instability can be prudent risk mitigation. The line between caution and distortion? Whether the behaviour aligns with demonstrable financial reality or operates independently of it.