How much do you need to be making a year to feel safe? Given that, according to the latest government figures, the median UK salary climbed to £37,430 in April 2024, compared with £35,004 in April 2023, anyone earning above that level would surely start to get comfortable.
Logically, that level of psychological safety should also be bolstered if you have done the sensible things of taken steps to protect your long-term financial health, like starting a pension, bought life cover and income protection, and perhaps started to invest in the Stock Market or kicked off other capital building actions. Surveys back this up: after all essential bills and costs are covered, 45% of UK residents believe you need more than £500 of disposable income a month to live comfortably, including a quarter of Brits responding that they feel £700-plus is required.
Those aren’t big numbers. Most of us do much better than that. The thing is, we’re not very rational, us human beings. On paper, earning above average, having money spare at the end of the month, being able to provide for family, have a luxury or two and so on should be enough for us… but we’re competitive, insecure monkeys. We look at what others have got that seems better than our lot, and we want the same shiny things they have. We feel that we should be at least as comfortable as our peers or the same people at our level in our profession or social network. As the saying goes, we want to be keeping up with the Joneses next door or who we went to Uni with.
But that inbuilt looking at others aspect of human behaviour is very often allied to what psychologists call ‘lifestyle creep’–when your standard of living rises in parallel to your discretionary income, soon enough what to you and your better half five years back would seem like extravagances slowly can become new necessities.
Which is fine if, as the Americans say, the trendline continues up and to the right for good. But what happens if you suddenly lose a contract or (God forbid) your job in a bit of Trump-related restructuring, or you or your partner gets ill?
I was about to say ‘unexpectedly ill’, but of course that sort of thing is always out of the blue. You might have some savings, but chances are most of us would panic and feel over-extended and feel we had to take some emergency actions.
There’s one last factor in what I’m driving at here, which is that for some people keeping up with the Joneses can end up allied to lifestyle creep in a really, really unhealthy way that makes them feel they can never have enough money to be secure or happy. And when things change, then you undergo the dreaded lifestyle relapse, or having to forego the shiny things you were accustomed to.
You may have had the challenge of living with a teenager or family member who doesn’t like their body to the extent they feel either hugely fat or under-developed—defined as body dysmorphia, a mental health condition where individuals spend a lot of time worrying about their appearance or a particular part of their bodies to the extent it starts to affect their lives.
Some people can end up in the same place in their financial lives—so, get financial or money dysmorphia, which manifests as a significant disconnect between your perceived financial reality and your actual financial standing. This is the flip side of lifestyle creep.
Left alone, financial dysmorphia can often lead to feelings of anxiety, guilt, or fear related to money. And it seems to be on the rise; Sky News points out that online search about the condition is rising, and a very concerning third of all Americans reported feeling money dysmorphia, including nearly half (43%) of Gen Z-ers.
There are obviously some big trends here in both our current society and maybe even our basic make-up that may make all this seem somehow inevitable. But living seriously and consistently out of whack with both the level of what you actually need money-wise to have a viable life and being unrealistic about how exposed you may or may not be to financial roadblocks is not a great combination for peace of mind and maybe even your physical (think, blood pressure and stress) health either.
It is good that money dysmorphia is being seen as a potential danger. But really, all you need to do to avoid both the trap of living beyond your means or beating yourself up because you don’t have the £213,000 in the bank HSBC says people think is the 2025 level of wealth is to just run a few regular reality checks and keep all this in perspective:
- Define What Financial Success Means For YOU
Money dysmorphia often stems from comparing your finances to friends, influencers, or against unrealistic standards. Instead, set personal financial goals that reflect your specific values, needs, and lifestyle, e.g., retiring early, owning a modest home, or funding meaningful experiences. Clarity on what success looks like for you is very grounding and can help you appreciate what you have a lot more. - Track Net Worth, Not Just Income or Spending
People often fixate on earnings or monthly budgets, which means they end up ignoring the bigger picture. Regularly tracking your net worth (assets minus liabilities) helps you see real progress over time and is a great way to minimise any tendencies to fixate on one-off purchases or temporary income dips. Your key though here is use this a long-term lens that balances short-term financial emotions.
- Let’s go on a Social Media Financial (Dis)Information Diet
Social media and generic financial “advice” online can distort your perception of what’s normal or attainable. Unfollow accounts that make you feel inadequate or anxious; better, seek out grounded, values-based financial content that aligns with your goals rather than showcasing extremes. - Separate Your Identity from Money
Your net worth is not your self-worth. Practice detaching your sense of identity from your financial status. This can be reinforced through journaling, mindfulness, or therapy. A healthy money mindset views finances as a tool, not a reflection of character or ‘fate’. - And Finally, Celebrate Progress, Not Perfection
People with money dysmorphia often feel like they’re never doing enough. Combat this by acknowledging milestones like paying off a debt, increasing your savings rate, or simply sticking to a plan for several months. Small wins build momentum and confidence.
By staying focused on personal goals, limiting unhealthy comparisons, and measuring what really matters, you can avoid money dysmorphia and build a more balanced relationship with your finances. A great way to start this journey and not end up living like what you imagine next door do and instead living YOUR life in a more stress-free way is to speak to an adviser.