There’s a new term floating around the internet: financial anorexia.
It comes from a recent article in The Independent describing people who are so afraid to spend money that they save obsessively—even when it’s clearly hurting their lives.
When I read it, I had two immediate reactions.
First: I knew exactly what they were talking about.
Second: I hated the name.
So in this week’s Earn & Invest “Current Events Thursday,” I brought on Carmel and Ian—both members of the Wealth with Purpose mastermind—to unpack what’s really going on here.
Because this isn’t just about money.
It’s about control, identity, and the stories we tell ourselves to feel safe.
The Problem With the Label
Let’s start with the obvious.
Calling it “financial anorexia” feels…off.
Ian put it best. Yes, the term captures something real: the idea that not spending can become a coping mechanism. A way to control uncertainty. A way to feel safe in a world that often isn’t.
But comparing it to a life-threatening eating disorder? That’s a stretch.
Carmel pushed even harder on this point. Financial behaviors, even extreme ones, are something we have agency over. They’re patterns we can recognize and change.
Anorexia nervosa is a clinical diagnosis. A serious medical condition.
Lumping the two together muddies both conversations.
But once you get past the name, the underlying issue is very real.
When Frugality Stops Being Healthy
Carmel shared something that hit close to home.
In her 20s and 30s, she lived in a state of extreme financial restriction. Not because she loved saving. Not because she was chasing early retirement.
But because she was afraid.
She had watched people she cared about become trapped…stuck in bad situations because they didn’t have financial independence.
And so she made a decision, whether consciously or not: that will never be me.
Her solution? Save aggressively. Spend as little as possible. Avoid risk at all costs.
From the outside, it probably looked like discipline.
From the inside, it was something else entirely.
It was trauma.
The Other Side of the Coin
Ian, on the other hand, laughed and said he lives at the opposite extreme.
He called it “financial obesity.”
Where the struggle isn’t an inability to spend, it’s an inability to stop.
And while the behaviors look different, the root can be surprisingly similar.
Both are attempts to manage discomfort.
Both are ways of trying to control something deeper.
And both can become problematic when they start to impact your well-being.
That’s the key distinction.
Frugality isn’t bad. Spending isn’t bad.
But when either starts running your life instead of supporting it, something has gone off track.
Control Disguised as Discipline
One of the most important points from the conversation was this:
These behaviors often aren’t about money at all.
They’re about control.
When life feels uncertain, money becomes something we can control. We can track it. Optimize it. restrict it. Expand it.
It becomes a proxy.
And over time, that control can feel so good—so stabilizing—that we don’t even realize it’s no longer serving us.
It’s just limiting us.
Why Traditional Therapy Falls Short
So how do you fix it?
This is where things get interesting.
We talked about therapy, and specifically the rise of financial therapy.
Because here’s the problem: traditional therapists are great at addressing emotional issues, but they often don’t understand the nuances of money.
If someone deep in the FIRE movement walks into a therapist’s office and says, “I’m anxious because I only have $100,000 saved and I need $2 million to feel safe,” the therapist might respond:
“You’re fine. You have plenty.”
But that misses the point entirely.
The anxiety isn’t about the number. It’s about the framework. The rules they’re operating under—like the 4% rule—and the identity they’ve built around it.
Financial therapists bridge that gap. They understand both the emotional and the financial sides of the equation.
And increasingly, that combination feels essential.
The Opposite Extreme Isn’t the Answer
Of course, whenever we identify one extreme, the natural reaction is to swing to the other.
Enter Die with Zero.
The philosophy that says we should spend aggressively on experiences, maximize memory dividends, and aim to die with nothing left.
Carmel appreciates the intention here. Especially the focus on living fully and giving while alive.
But she also pointed out something important.
Trying to perfectly time your last dollar is just another form of control.
Another optimization problem.
Another way of letting money dictate your behavior.
Money Isn’t the Point
And that’s where I think both sides get it wrong.
Whether you’re hoarding money or spending it down to zero, you’re still giving it too much power.
You’re still acting as if money itself is the thing that creates happiness or prevents misery.
But it doesn’t.
Money is a tool.
Nothing more. Nothing less.
It can help you build a life you care about. It can give you options. It can reduce stress.
But it can’t tell you what matters.
What Actually Matters
After recording this episode, I found myself thinking about a recent experience at the EconoMe conference.
You’d expect a gathering like that to be all about strategies—tax optimization, withdrawal rates, spreadsheets.
But that’s not what stuck with me.
What mattered were the people.
The conversations. The shared stories. The sense of community.
That’s the real currency.
Not the dollars we save or spend, but the connections we build along the way.
Why We Hold On Even When We Don’t Need To
Before we wrapped, Carmel and I touched on one last piece of this puzzle.
Why do people hold onto extreme frugality even after they’ve “made it”?
Part of it is identity.
Being the saver. The disciplined one. The person who doesn’t need much.
That identity gets reinforced. Praised. Rewarded.
And letting it go can feel like losing a part of yourself.
There’s also an environmental component.
For many, spending less aligns with their values: reducing waste, consuming less, being mindful.
And that’s a beautiful thing.
But like anything else, it can be taken too far.
Finding the Middle Path
So where does that leave us?
Probably somewhere in the messy middle.
Where we save with intention, but not fear.
Where we spend with joy—but not recklessness.
Where money supports our lives instead of controlling them.
Because in the end, this isn’t about financial anorexia or financial obesity or dying with zero.
It’s about building a life that actually feels worth living.
And money?
It’s just one of the tools we get to use along the way.
Just my opinion, but this subject is so complex, the solution may be a little different for everyone.
I'm one who definitely falls on the frugal side of the coin. I'm a former accountant and I think I'm pretty good with finances. That's no match for the deep rooted frugality.
For me, what's worked is having a trusted financial person (could be an advisor but could also be a trusted friend) to leverage. When I meet with my trusted person, we talk for about an hour. Fifty-five minutes is a discussion about our families, hobbies, you name it. The last five minutes are about money.
Outside of the scheduled discussions, if I have a large financial decision to make, even if I know the math works, I will reach out to my trusted person, not for approval, but to make sure my emotional tendencies aren't unknowingly impacting the decision.
My approach may not be right for anyone else, but it's helped me.