A financial therapist has warned of the symptoms of “money dysmorphia” which is affecting some people’s day-to-day lives.
Aja Evans said a notable red flag are those who constantly worry about money, no matter how much they’ve got in the bank. The authour of Feel Good Finance told CNBC Make It: “Money dysmorphia is about feeling like your financial state is different than the actual reality of it.”
It starts to become a problem when your distorted perception of your finances disrupts your day-to-day life, she says.
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“If you feel like, ‘Hey, I’m starting to isolate because I don’t feel like I have the money to go out,’ even though your bank account may say that there is money in your account, that is a red flag.”
She said hanging out with your friends or doing other activities you enjoy is important for your mental health, and isolating yourself can lead to further negative and distorted thought patterns about your money situation.
“If you think you may be struggling with money dysmorphia, first identify what internal beliefs you have about money and where they may have come from,” she added.
Aja urges people to ask themselves three questions. Have I gone without in the past? Have I overspent and put myself in a precarious financial position before and do I not trust myself with money?
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She said answering the questions can help give people a better understanding of the feelings driving their current money habits.
“You need to look at your numbers to understand what’s coming in, what’s going out and what do you need to make sure you have so that all of your basic needs are taken care of? And then, what does it look like to have some extra?” she said.
One popular method is the 50/30/20 rule which was reported by the Daily Star last week. With this strategy, you set aside 50% of your paycheck for necessities like housing, food and transportation, then put 30% toward your “wants,” such as shopping or entertainment, and the remaining 20% toward your emergency fund and retirement savings.
Understanding where your money is going can help you develop a more realistic view of your finances.
Aja said: “Grounding yourself in the reality of your numbers is really important.
“That can help you move past old patterns and shift them into new ones that benefit you.”
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