Magdelena Harding explains the concept of money dysmorphia and how it could cause dental professionals to underestimate their wealth.
As a dentist, it’s easy to feel squeezed financially despite being a higher earner. Rising costs of living, hefty tax bills, mortgage repayments and practice overheads can create a sense that your hard-earned income simply vanishes into thin air.
But could this feeling be masking a stronger financial position than you realise?
Welcome to the concept of money dysmorphia, a new ‘trending’ financial term, used to describe a disconnect between someone’s financial reality and their perception of how wealthy they are.
Here’s why it’s happening – and how looking beyond today’s headlines can help you take control and build confidence in your financial future.
Cost of living pressures are real – but they aren’t the whole story
There’s little doubt the UK has experienced significant financial pressures in recent years. Inflation has driven up everyday costs, from energy bills to the weekly food shop. Interest rates have risen, meaning mortgage repayments have increased for many. Insurance premiums, employer national insurance contributions, and materials for practices have also climbed for dental professionals.
And to make matters worse, you can’t seem to escape it in the news headlines.
However, day-to-day cash flow pressures can sometimes overshadow the overall long-term outlook. Delaying financial decisions due to feeling uncertain can mean you lose out in the long run.
Starting early with saving and investing and doing so regularly – even with small amounts – can help manage the impact of economic turbulence on your finances. Techniques like pound cost averaging smooth out the ups and downs of markets by investing at regular intervals, rather than trying to time the perfect moment with a lump sum.
There’s also the power of compound interest – earning returns on both your original investment and the returns themselves – which can help your money grow faster.
Both strategies can reward consistency and patience, even in a challenging economic climate.
Please note that the value of investments can go down as well as up and you may get back less than you invest.
Why high earners feel ‘poorer’ than they are
Several psychological factors can play a part in creating money dysmorphia.
Lifestyle inflation – where growing income is followed by growing lifestyle expectations – means income and outgoings rise proportionately. Private school fees, car upgrades, holiday homes, and luxury goods can absorb new earnings quickly, maintaining the feeling of ‘just getting by’.
Then there’s peer comparison to contend with. It’s human nature to compare ourselves to others. Social media, peer groups, and professional circles can create unrealistic benchmarks of ‘success’ that distort how we view our own financial progress.
It’s important to remember that financial planning, particularly in a nuanced career like dentistry, needs a very tailored personal outlook and plan. Your colleagues’ goals and steps for achieving them may be very different to your own due to various factors such as the NHS to private mix of income, pension provisions, whether you are a practice owner or not and much more.
Finally, many dentists in my experience as a financial adviser tend to focus on the short to medium term when it comes to financial planning. This is natural – as the saying goes, ‘the squeaky wheel gets the oil’. You will naturally focus on what is perceived as the most immediate financial concern first.
The pressures of running a busy practice or juggling multiple associate roles can make it hard to step back and assess long-term wealth objectively. Without regular financial check-ins, it’s easy for even successful practice owners and associates to feel permanently behind.
Looking under the surface: wealth you might be underestimating
When working with dentists, I often find it’s easy to uncover areas of forgotten, hidden or unrecognised wealth.
NHS and private pension schemes can amount to a substantial future income in retirement, even if they don’t feel ‘real’ today. These are excellent vehicles for tax efficient saving over the long-term. If you are a higher or additional rate tax payer, pensions can also help you reclaim your personal allowance.
There are also additional tax allowances to explore, such as your annual ISA allowance of £20,000 (with a separate £9,000 junior ISA allowance for children per annum).
Many practice owners and homeowners have seen significant growth in property values over the last decade, building up a substantial level of equity. Practice ownership builds significant asset value over time, especially if succession or sale is part of a longer-term plan. This needs to be carefully evaluated in your estate planning to protect the legacy you wish to leave behind.
For practice owners, idle practice business funds that aren’t needed for the day-to-day running of the practice can be put to work in the form of commercial investments – helping during times of low interest rates, where the purchasing power of these funds can be eroded over time.
Remember: Tax treatment depends on individual circumstances and may be subject to change in future. The Financial Conduct Authority does not regulate estate planning.
Breaking free of money dysmorphia
A trusted financial adviser can offer a reality check – providing a full, honest overview of your current position and helping you understand where you truly stand.
At Wesleyan Financial Services, we have dedicated specialists who work exclusively with dental professionals. We understand the unique financial journeys dentists experience, from foundation training through to practice ownership, retirement and creating a legacy for your loved ones.
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