How money dysmorphia can derail your financial planning

You earn a decent income. You’ve paid off your student loans. Your savings account has grown steadily. Yet deep down, you feel… broke. If that sounds familiar, you’re not alone—and you’re not irrational. You might be experiencing something called money dysmorphia.

Much like body dysmorphia, where someone fixates on perceived physical flaws despite objective appearances, money dysmorphia distorts how people perceive their financial health. It can show up in high achievers with seven-figure portfolios who still obsess over restaurant bills. Or in mid-career professionals who over-save out of fear, or overspend just to feel successful. This isn’t about poor math. It’s about poor alignment between perception and financial reality. And the costs are real.

Money dysmorphia often arises in people with high ambition or financial trauma backgrounds. It affects how they feel about their money—regardless of what their bank accounts say. Someone earning $150,000 may still fear they’re behind because they compare themselves to a peer who owns multiple properties or invests aggressively in crypto. A person with $100,000 in savings may still panic at the idea of a holiday because “that’s not what responsible people do.”

The core belief: “I don’t have enough.” Even when, objectively, they do.

In my financial planning sessions, I’ve met clients with a net worth above S$1 million who still refuse to spend S$5 on coffee. Not because they can’t afford it, but because they don’t feel safe enough. Others earn six figures but fall into payday-to-payday habits because they over-identify with a “broke student” self-image from years past. These patterns aren’t always visible to the outside world—but they quietly sabotage long-term planning.

The most common financial symptoms of money dysmorphia don’t look irrational. In fact, they can look like textbook financial “discipline.” But they often mask a deeper misalignment between life goals and money behaviors.

1. Chronic Over-Saving Without Purpose

Some clients set aggressive savings targets—50%, 60%, even 70% of their income—well beyond their retirement needs. On paper, it’s impressive. But when questioned, many can’t explain why. There’s no goal. Just a fear of not having enough. The result? Life gets postponed. Travel. Hobbies. Even basic enjoyment. Wealth becomes hoarded, not harnessed.

2. Emotional Over-Spending as Self-Compensation

Others use spending to fight the “I’m still poor” feeling. Promotions get celebrated with luxury purchases. Hard days get softened with online shopping. The issue isn’t income or debt—it’s the underlying belief that wealth is something you have to prove, not quietly own.

3. Reluctance to Invest

People with money dysmorphia may feel safer keeping large sums in cash, even when inflation is eroding its value. Why? Because cash feels visible and controllable. Markets feel abstract, even dangerous. This avoidance behavior leads to missed compounding—and ironically, can cause the very shortfall they fear.

4. Hypervigilant Budgeting

Budgeting is a powerful tool. But some turn it into a daily obsession, tracking every cent to reassure themselves they’re “being good.” There’s no flexibility. No spontaneity. Every deviation feels like failure. It’s not a plan—it’s a punishment loop.

If you’re saving aggressively but afraid to retire, if you invest cautiously but still feel behind, or if your net worth climbs while your anxiety does too—you’re not financially broken. You’re emotionally misaligned. Money dysmorphia often stems from past instability: job loss, debt, parental financial trauma, or even social comparison. But its effect compounds over time. You can follow every planning rule and still miss the point of planning: to create a life of freedom, not just security.

Unchecked, money dysmorphia can:

• Delay key milestones like home ownership, retirement, or family planning
• Cause relationship friction due to mismatched spending comfort
• Lead to burnout from overworking to “feel safe”
• Create paradoxical guilt around enjoying what you’ve earned

A well-crafted financial plan becomes fragile if it’s shaped by fear, not intent.

You don’t need to abandon your goals. You need to recalibrate how you see progress.

Try this mental reframe:

1. Shift from “What I Have” to “What I Need to Live Well”

Instead of anchoring your plan to arbitrary net worth targets, define what security actually means for you. How much do you need to feel stable for three months? For five years? Build around real costs, not abstract fears.

2. Reintroduce Joy and Permission into Spending

Ask yourself: “What spending gives me energy back?” Not all spending is waste. A gym membership, art class, or even the occasional Grab ride during a stressful week might reinforce your wellbeing. Budget for it—without guilt.

3. Use the “5-Year Self” Test

When making decisions, ask: “Would the 5-years-older version of me thank me for this?” It works both ways—for over-saving and over-spending. It encourages moderation rooted in long-term wisdom.

4. Revisit Your Planning Metrics

Instead of obsessing over daily fluctuations in your investment portfolio, focus on runway: How many months of living expenses can your assets cover? Are you growing your passive income sources at a sustainable pace?

Money dysmorphia thrives in silence. But the moment you name it, you start to loosen its grip. Ask yourself:

• Am I afraid to spend, even when I’ve planned for it?
• Do I feel undeserving of financial rest or enjoyment?
• Do I track every cent because I want control—or because I feel out of control?
• Have I moved the goalposts for “enough” so often I no longer know where they are?

If the answer is yes to any of the above, your next step isn’t financial. It’s emotional awareness. And maybe, a conversation with a planner who sees the whole picture—not just the numbers.

You don’t need to rush into therapy or redesign your entire financial system overnight. Start small. Pick one behavior that feels restrictive or disconnected from your goals. Revisit it with compassion and structure.

For some, that might mean automating an investment plan so you don’t second-guess it every month. For others, it might mean creating a guilt-free “living well” bucket to spend on what makes life vibrant. The truth is, the numbers often aren’t the problem. It’s the story we’ve told ourselves about those numbers.

And stories take time to change. You won’t wake up tomorrow and feel fully “safe” just because your spreadsheet says so. But you can begin to trust that progress is happening—even when it’s quiet. Financial maturity isn’t about reacting fast. It’s about responding with clarity.

Every aligned step—no matter how small—compounds. In the end, the most resilient financial plans are not built with fear or force. They’re built with rhythm, confidence, and care.