Damien Jordan, founder of Financial Interest and Damien Talks Money, has shared insights into Money Dysmorphia, with some strategies on how to overcome it along with why people aren’t investing in their retirement.
Why might there be so many people suffering with Money Dysmorphia?
“With high inflation, stagnant wages, and a challenging housing market, it’s no wonder many have a distorted view of finances along with doubts about ever being able to achieve wealth. In fact, 1 in 5 UK adults would consider themselves financially vulnerable with experience of financial stress1.
3 signs you may be struggling with Money Dysmorphia
- Feeling like you could never have enough money for life’s big purchases
We constantly hear news about how difficult the market is for first-time buyers, and it’s easy to fall into the mindset that some of life’s big purchases, such as buying a house, are unachievable. The best thing you can do is start. Define what you want to achieve financially, such as saving for a house, saving for a milestone, or a comfortable retirement. Then, protect savings against inflation using a Cash ISA that offers the biggest interest rates in 2025 or a Lifetime ISA.
- Feeling like investing is only for the rich
There’s a misconception that investing and earning wealth from investments is only for those who are already wealthy. Once you’ve built up your savings, consider investing in index funds, as this allows you to potentially gain a much larger return, protects you against inflation, and is ideal for long-term investments such as retirement. For example, the S&P 500, a list of the 500 biggest businesses in America, has delivered an average yearly return of 10.31% since it was founded in 1957, whereas a typical ISA only offers 2-5%. It’s most important to note that an investor with little knowledge is still almost guaranteed to see returns by diversifying and keeping costs low; index funds typically outperform managed funds run by professional money managers.
- Feeling like retirement is too far away and money is needed right now
With the rising cost of living, many people are prioritising short-term survival over long-term savings, which pensions fall into. As it happens, around 20% of private sector employees and 80% of self-employed workers are not saving in a private pension, and 40% of those saving into a ‘defined contribution’ pension are set to miss the standard benchmark for an adequate retirement income2.
However, many people are unaware that if you invest as little as £200 per month for 32 years whilst reinvesting dividends and achieving a 10.31% average annual return, you would have a balance of £543,266.09, from investing £76,800, which would suffice for a comfortable retirement pot.
How to overcome money dysmorphia
In order to overcome this, it’s important to avoid comparisons and pre-conceptions around how much money you think you ‘should have’ and assess your financial health objectively using financial statements and budgeting apps. This may even require a financial advisor to offer an objective view.
Ultimately, there are many ways to ensure your financial situation is comfortable and using the tools I’ve mentioned above will help your financial anxiety or insecurity by offering you a means of monitoring your savings and helping to keep track of whether you’re reaching your financial goals and investments.”
