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Social media has put a new spin on keeping up with the Joneses.
Exposure to glorified lifestyles online has left many people, especially young adults, feeling financially inadequate, even if they’re doing relatively well, reports show.

Overwhelming evidence suggests social media has a negative impact on self-esteem.
That’s not only true for how people feel about their appearance and social status but also their financial wellbeing and economic standing.

A new term, “money dysmorphia,” aims to describe the distorted view of their finances that nearly one-third, or 29%, of Americans say they now experience, according to a recent report by Credit Karma, often from comparing their financial situation to others’ and feeling inadequate.
“Money dysmorphia is kind of like today’s version of keeping up with the Joneses,” said Courtney Alev, consumer financial advocate at Credit Karma.
Not surprisingly, money dysmorphia is even more prevalent among younger generations, according to Credit Karma. Roughly 43% of Gen Z and 41% of millennials struggle with comparisons to others and feel behind financially.
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“This has been a problem for a very long time but social media has taken it to a whole new level,” said  Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

Many of those who experience money dysmorphia have above-average savings, Credit Karma also found. However, they are also likely to admit to being obsessed with the idea of being rich.
There is a “distortion between perception and reality,” Alev said.

Only 14% of Americans consider themselves wealthy

That feeling of being well off is increasingly elusive, almost regardless of how much money you have, a separate report by Edelman Financial Engines also found.
The average household’s net worth has soared in recent years, rising 37% between 2019 and 2022, according to the survey of consumer finances from the Federal Reserve.
Still, only 14% of Americans would consider themselves wealthy, according to Edelman Financial Engines, and the bar is only getting increasingly out of reach. In fact, more than half of Americans earning more than $100,000 a year say they live paycheck to paycheck, another report by LendingClub found.
A prolonged period of high inflation and instability has chipped away at most consumers’ buying power and confidence. Instagram is also partly to blame.
“What we found was a really strong connection between feeling badly about your money situation and how much time you spend on social media,” said Isabel Barrow, the director of financial planning at Edelman Financial Engines.

Roughly one-quarter of consumers feel less satisfied with the amount of money they have because of social media, the Edelman Financial Engines study also found. That can even lead some to overspend on such big-ticket items as a vacation, home renovation or luxury good because of the pressure to keep up with the “digital Joneses.”
Barrow, who recently deleted her own Instagram account, advises others to spend less time on social media and remove any payment details stored online to help create “purchase hurdles” that force you to think through buying decisions.
“Sometimes you have to set up guardrails for yourself,” she said.
Then address the financial psychology, added McClanahan, who also is a member of CNBC’s Advisor Council.
“There’s this perception that you have to portray yourself as successful and that means having an expensive watch or nice car and that is so untrue,” she said. “You have to make sure you are happy. Stuff isn’t going to make you happy.”
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The Biden administration’s new student loan bankruptcy policy is making it easier for borrowers to walk away from their debt in court, attorneys say.
“We have gotten forgiveness for a number of clients under the new bankruptcy changes,” said Malissa Giles, a consumer bankruptcy lawyer in Virginia. “The discharge is life changing.”

Bankruptcy Court. Dayton, Ohio. 
Stanrohrer | E+ | Getty Images

The Biden administration’s new student loan bankruptcy policy is making it easier for borrowers to walk away from their debt in court, attorneys say.
“We have gotten forgiveness for a number of clients under the new bankruptcy changes,” said Malissa Giles, a consumer bankruptcy lawyer in Virginia. “The discharge is life changing for them and their families.”

In the fall of 2022, the U.S. Department of Education and the U.S. Department of Justice jointly released updated bankruptcy guidelines aimed at making the process for student loan borrowers less arduous.
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Previously, it was difficult, if not impossible, for most people to part with their education debt in a normal bankruptcy proceeding.
Amid concerns that students would rack up debts for their education and then try to ditch their obligations, policymakers over the years had added extra stipulations for the discharge of student loans in bankruptcy. Borrowers needed to prove “undue hardship,” or a “certainty of hopelessness,” and government lawyers battled most of the requests.

The Biden administration’s updated policy now treats student loans more like other types of debt in bankruptcy court, experts say. Student loan borrowers can fill out a 15-page form, detailing their financial struggles and making their case for a mulligan.

“While the government used to fight discharge aggressively in almost every case, there is now a policy to agree when the borrower can show financial need and a history of good faith efforts to pay the loans,” said Latife Neu, a bankruptcy lawyer in Seattle.
“I’ve helped several people take advantage of the expanded ability to discharge their student loans in bankruptcy,” Neu added.

Student loan borrowers have other options for relief

While borrowers in extreme financial distress may benefit from the more lenient rules, most people should try to avoid bankruptcy, experts say.
Depending on the type of bankruptcy you pursue, that information can stay on your credit report for up to 10 years, making it a challenge to buy a house, apply for other types of loans and even to rent an apartment.
Most borrowers should look for other relief options instead, said higher education expert Mark Kantrowitz.
Federal student loan borrowers have several ways to reduce their debt burden, including income-based plans with $0 monthly payments and economic hardship and unemployment deferments. There are also loan relief opportunities for borrowers with disabilities and cancer.

Lastly, after President Joe Biden’s plan to cancel up to $20,000 in student debt was struck down at the Supreme Court, the president started a new effort to forgive education debt. One of the groups that may qualify are those in financial hardship.
As a result, Kantrowitz said, borrowers might want to wait and see what relief the government is able to deliver before they pursue bankruptcy. The Biden administration may announce its revised forgiveness package as soon as November.
Struggling borrowers who are still considering bankruptcy should talk with a nonprofit credit counselor before they file, he said.

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Consumers still grappled with price growth in February, new government data shows.
Here’s which goods and services went up the most.

Shoppers are seen in a Kroger supermarket in Atlanta on Oct. 14, 2022.
Elijah Nouvelage | AFP | Getty Images

Consumers continued to contend with higher inflation in February, according to new government data.
The consumer price index — an inflation measure that tracks changes in the prices of consumer goods and services over time — rose 3.2% from a year ago and 0.4% in February, according to monthly data released by the Bureau of Labor Statistics.

Inflation is down from its hottest point in 2022, but is still warm, considering the Federal Reserve’s 2% inflation target. While Americans’ optimism about the economy has improved, many still say that price increases have caused financial hardship, a recent Gallup poll round.
February’s monthly rise was mostly due to increases in gasoline and shelter, according to Mark Hamrick, senior economic analyst at Bankrate. Yet food prices overall were flat for the month.

While there has been progress bringing year-over-year headline and core inflation down, there could be some stalling of that progress in the near term, said David Doyle, head of economics at Macquarie, pointing to the spikes in gas and shelter.
“There is more room to fight on the inflation battle,” Doyle said. “And there’s a bit further to go before everyone goes out and declares victory.”

Where inflation was high in February

Certain items have seen double-digit increases in prices year over year, including juices and drinks, up 27.2%, and motor vehicle insurance, with 20.6%.

Drivers also contended with increased prices for motor vehicle repair, up 8.5% year over year. Meanwhile, though gas prices were down 4.2% year over year, they were up 4.1% for the month.
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Certain consumer services, such as admissions to sporting events and tax return preparation, were up 11% and 9.8%, respectively.

Why Americans still feel financial strain

Inflation in the CPI has subsided since its 9.1% peak in 2022. Real wages are on the rise, said Hamrick, which means people are seeing wages adjusted for inflation.
Yet inflation has risen a total of 20% since before the pandemic, Hamrick said. So while those higher wages restore some of what was lost in purchasing power, it is not a full replacement, he said.
“There’s still this sense of having lost something, because purchasing power was truly lost in that transition,” Hamrick said.

One important gauge that shows the economy is strong — the unemployment rate — has been below 4% for the longest stretch since the 1960s, he said.
However, for those laid off as companies shed thousands of jobs in recent months, the employment market may not feel strong. Likewise, inflation may hit some people harder than others. Those experiences tend to shape how people feel about the economy, Hamrick said.
An upward inflection will not feel great for consumers, Doyle said, and also points to a longer time before the Federal Reserve starts to cut rates.
“That doesn’t mean that we’re still not in a disinflationary process,” Doyle said.

When interest rates may subside

One factor that affects how well Americans are doing — for better or for worse — is interest rates.
When it comes to savings, there’s the opportunity to get the highest returns on cash in years. But those with debts — such as credit cards or mortgages — are likely facing higher costs on those balances.
The Fed is expected to lower interest rates this year, after having executed a series of rate increases to try to tamp down inflation. But the central bank’s March meeting likely will be too soon for a cut.
“We don’t perceive there to be like an imminent pressure on the Fed to cut rates,” such as a recession or sudden rise in unemployment, Doyle said.

Before implementing any cuts, the Fed will want to have evidence that its work combatting inflation is done, he said.
“We’re sort of skeptical that over the next couple of months that the Fed will be able to get there,” Doyle said.
The first interest rate reduction may come in July, according to Macquarie’s forecast, with two cuts totaling 50 basis points this year. The firm is also predicting reductions totaling 50 basis points in 2025.
Rate cuts will help borrowers, especially those who are leaning more heavily on their credit cards now, Hamrick said.

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Direct File, a free tax filing program from the IRS, fully opened in 12 pilot states on Tuesday.
The U.S. Department of the Treasury estimates that one-third of federal income tax returns could use Direct File this season and 19 million taxpayers may currently be eligible.

Artistgndphotography | E+ | Getty Images

Estimated state-by-state eligibility

The Treasury estimates that 19 million taxpayers may be eligible to use Direct File this season, with the following breakdown in each pilot state:

California: 5.2 million
Arizona: 690,000
Florida: 2.4 million
Massachusetts: 850,000
New Hampshire: 200,000
Nevada:480,000
New York: 2.8 million
South Dakota: 110,000
Tennessee: 960,000
Texas: 3.8 million
Washington: 1.1 million
Wyoming: 80,000

The agency hopes to see 100,000 filings this season, according to a senior administrative official. That works out to roughly 0.5% of those eligible filers.

IRS Free File returns up nearly 15%

This season, the Direct File pilot is only available in 12 states, but most taxpayers also qualify for another option: IRS Free File.
The program is a public-private partnership between the IRS and the Free File Alliance, a nonprofit coalition of tax software companies. There are eight Free File partners for 2023 federal filings and some include state returns.
You can use Free File if your 2023 adjusted gross income was $79,000 or less. Free File also offers Fillable Forms for all income levels, which is the electronic version of a paper filing.

It’s free, it’s easy to use and it’s available.

Executive director of the Free File Alliance

Some 70% of taxpayers, or roughly 100 million Americans, are eligible for Free File. “It’s free, it’s easy to use and it’s available,” said Tim Hugo, executive director of the Free File Alliance.
While only 3% of taxpayers used the program last season, Free File returns (including Fillable Forms) are up nearly 15% through March 8 compared to the same week last year, according to Hugo.
Other free tax filing options this season include Volunteer Income Tax Assistance, Tax Counseling for the Elderly and private company software. More

Factors beyond high mortgage rates are affecting housing affordability for many Americans, according to experts.
The connection between housing costs and wages has been gradually separating over the years, according to C. Kirabo Jackson, an economist and member of the White House Council of Economic Advisers.
Similarly, the number of new housing units built throughout the years has been declining, and the low supply is rooted in restrictive land-use and zoning regulations, according to experts.

Skynesher | E+ | Getty Images

Factors beyond high mortgage rates are affecting housing affordability for many Americans, according to experts.
Almost four years ago, a household earning $59,000 annually could afford a new mortgage without spending more than 30% of their monthly income and with a 10% down payment, according to a recent report by Zillow Group.

That is no longer the case today.
While the typical household in 2024 makes about $81,000 a year, up from $66,000 in 2020, wages have not kept up with housing costs.
“Since January of 2020, the typical mortgage payment on the typical home in the U.S. has nearly doubled,” said Orphe Divounguy, a senior economist at Zillow.
Nowadays, potential homebuyers need to make about $106,500 a year in order to afford the typical home today, an 80% increase from January 2020, according to Zillow.
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The connection between housing costs and wages has been gradually separating over the years, according to C. Kirabo Jackson, an economist and member of the White House Council of Economic Advisers.
“Around the mid-’90s, you start to see housing prices sort of separate from median wages in a way that kind of made housing less and less affordable for people who are in the market,” Jackson said.

More supply ‘helps keep prices down’

Tight supply is another reason behind unaffordability. Fewer homes available on the market for would-be buyers keeps real estate prices elevated and, in some local markets, the shortage makes prices climb higher.
The number of new housing units built throughout the years has been declining, and the low supply is rooted in restrictive land-use and zoning regulations, according to experts.
“If we have a supply problem, we really need to have a supply solution,” Divounguy said.
Land-use and building regulations across the country make it difficult in some markets to build new homes, Divounguy said.
And the most important way to improve affordability is to construct more housing in the U.S, he said.

We have a growing economy, we have a growing population. As your population grows, you have to build more housing to accommodate the growth and population

C. Kirabo Jackson
Member of the White House Council of Economic Advisers

To increase housing supply, local policymakers would need to lower the barriers for builders by easing land-use and zoning regulations, which determine factors like the maximum height of a building or the minimum size of a lot, Jackson said.
For example: Some local areas may say you can’t construct buildings more than three stories high in a particular area, which means high-rise buildings that could house about 100 people are out of the question.
“Instead, you have to have a house that maybe has five people,” Jackson said. “The more supply you have helps keep prices down. So the more housing that you make available, the more that’s going to sort of ease price pressures.”
While increasing the housing density in an area can boost affordability, land-use and zoning regulations, which inherently determines an area’s housing supply, is often decided at a local level, he said.

“If you really wanted to expand the supply of housing, one of the most immediate ways one could do that would be to ease up on these zoning restrictions and allow the construction of affordable housing in areas that currently would not be allowed under local land-use rules,” Jackson said.
Some areas have already begun to see a boom in new housing inventory due to relaxed zoning rules, according to Divounguy. Markets that allow builders to make smaller, attached homes as opposed to detached, single-family housing are seeing a surge in new construction, like markets in the South.
“Markets that have more restrictive land-use, regulations, zoning rules are markets where you’re not seeing the type of new construction necessary to keep up with demand for housing,” Divounguy said.
While local zoning rules are not under the federal government’s control, the administration is working toward local areas to be more flexible by providing financial incentives to help developers build more affordable housing, said Jackson.
“We have a growing economy, we have a growing population. As your population grows, you have to build more housing to accommodate the growth and population,” Jackson said.

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Women and Wealth Events
Your Money

Today, a woman just starting out will earn $399,600 less over a 40-year career compared to men, according to a new analysis by the National Women’s Law Center.
For Black women, this lifetime wage gap totals $884,800, and for Latina women, the losses are $1,218,000.
“Employers need to take a hard look at what’s happening within their walls and take action to remedy it,” says Jasmine Tucker, the National Women’s Law Center’s vice president of research.

Equal Pay Day is a reminder of the persistent income inequality between men and women.
As it stands, women earn just 84 cents for every dollar earned by men, according to an analysis of U.S. Census Bureau data by the National Women’s Law Center.

“When you look at the cent number, it looks like it’s small,” Jasmine Tucker, the National Women’s Law Center’s vice president of research, said of the shortfall. “I don’t think that does justice to the actual losses.”
This year, March 12 marks just how far into the new year full-time female workers have to keep working to make what their male counterparts typically made in just the previous year, also known as the gender pay gap.
Over time, the inequality is magnified. Based on today’s wage gap, a woman just starting out will lose $399,600 over a 40-year career, according to the National Women’s Law Center.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

The pay gap worsens significantly for Black and Latina women.
For Black women, the lifetime wage gap adds up to $884,800, and for Latina women, the losses total $1,218,000, the nonprofit advocacy group found.

That also means that Black and Latina would have to work full time, year-round to nearly age 80 or 90 to make what white non-Hispanic men are paid by age 60, Tucker said, “or they forfeit over $1 million in losses.”

Why the gender pay gap persists

There is no single explanation for why progress toward narrowing the pay gap has mostly stalled, according to a separate report by the Pew Research Center. Some contributing factors: Women are still more likely to pursue careers in lower-paying industries, and to take time out of the labor force or reduce the number of hours worked because of caretaking responsibilities — often referred to as the “motherhood penalty.”
Systemic bias has also played a role.
Women of color remain underrepresented in higher paying occupations.
“Even when Black women are in the same roles, they are paid less,” said Ofronama Biu, principle research associate at the Urban Institute.
In addition to wages, there is also a benefit gap, Biu said.
“Pay is important but there are other things that impact people’s economic security,” such as retirement accounts, paid time off and health care, she said.

What it takes to achieve progress

No “one thing” is going to close the wage gap, Tucker said. However, research shows that there are some measures that can help, including the recent rise in pay transparency laws enacted by states and municipalities.
The idea is that pay transparency will bring about pay equity — equal compensation for work of equal or comparable value, regardless of worker gender, race or other demographic category.
“Employers do not need to wait for states to pass laws to put some of these tools into practice,” Tucker said. “Employers need to take a hard look at what’s happening within their walls and take action to remedy it.”

“Companies need to be open about what they are doing and their plans — it really starts and ends at the corporate level,” Lauren Sanfilippo, senior investment strategist at Bank of America’s Chief Investment Office, also said.
Yet, “to wait around for those indicators is not the way to find progress fastest,” Sanfilippo added.
In the meantime, Sanfilippo advises women to keep a close eye on workplace practices and pay. “You want to be paid according to what you are doing and what you are offering the firm.” More

IRS Direct File is now fully open in 12 pilot states for “simple tax situations,” according to the U.S. Department of the Treasury. 
The Treasury estimates the Direct File pilot could cover about one-third of federal tax returns or 19 million taxpayers, and hopes 100,000 filers will participate this season.

miniseries | Getty

After weeks of testing with roughly 1,500 returns, Direct File, a free tax filing program from the IRS, is now fully open in 12 pilot states, according to the U.S. Department of the Treasury.
While the pilot focuses on “simple tax situations,” the Treasury estimates the pilot could cover about one-third of tax situations for 19 million taxpayers. The Spanish language version opens later on Tuesday at 1 p.m. ET. 

“Dozens of countries have provided free tax options to their citizens for years,” Deputy Secretary of the Treasury Wally Adeyemo said during a press call on Monday. “American taxpayers who want to file their taxes for free directly with the IRS should have that option.”
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Treasury officials hope at least 100,000 taxpayers will participate in the Direct File pilot for 2023 filings as the agency makes future decisions about the program, Adeyemo said.
Within five years, the program could save the average filer $160 per year, or a collective $11 billion annually including tax prep fees and time, according to a report from the Economic Security Project released Monday.

IRS Direct File pilot states

The IRS Direct File pilot states include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. Alaska was originally included but is no longer part of the pilot.

The soft launch and limited rollout were intentionally designed to capture data to make improvements and decisions for the future, a senior administrative official said.
Direct File pilot doesn’t support state returns, but the software will guide users from Arizona, California, Massachusetts and New York to a state-supported tax-prep tool.

Direct File pilot open to limited filers

You may qualify for Direct File with a simple, straightforward return, with limited types of income, credits and deductions, according to IRS officials.
The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. This excludes filers with contract income reported via Form 1099-NEC, gig economy workers or self-employed filers.
To qualify, you must claim the standard deduction, which is $13,850 for single filers and $27,700 for married couples filing jointly for 2023.
Direct File only accepts a few credits: the earned income tax credit, child tax credit and credit for other dependents. The software also accepts deductions for student loan interest and educator expenses.

Scrutiny of IRS Direct File

The Direct File pilot launch comes amid pushback from the private tax filing industry. There has also been scrutiny from some Republicans who have questioned the agency’s authority to create the program.
When asked about Direct File during a House Ways and Means hearing in February, IRS Commissioner Danny Werfel said the agency has “a responsibility and an authority to offer taxpayers different approaches for how to meet their tax obligation.”
Taxpayers have several free filing options this season, including IRS Free File, Volunteer Income Tax Assistance, Tax Counseling for the Elderly and private company software. More

President Joe Biden proposed expanding access to free community college across the U.S., and other initiatives to make higher education less costly.
In the president’s budget for fiscal 2025, Biden called for increasing the amount of Pell Grants and establishing a “Reducing the Costs of College Fund.”

Woman with hands raised in the classroom
Fg Trade | E+ | Getty Images

President Joe Biden has proposed expanding free community college across the U.S., and other initiatives to lower higher education costs.
The plans, announced Monday as part of Biden’s $7.3 trillion budget for fiscal 2025, face slim chances of becoming law this year with Republicans in control of the House.

Still, the budget reflects the president’s policy priorities as he seeks reelection in November.
“With these investments, we can deliver an excellent education to all students, improve learning conditions, build pathways to college and careers, and increase postsecondary education affordability and access,” U.S. Secretary of Education Miguel Cardona said in a statement.
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After the Supreme Court blocked Biden’s sweeping student loan forgiveness plan in June, his administration has explored all of its existing authority to leave people with less student debt. It has now canceled debt for almost 3.9 million borrowers, totaling $138 billion in relief, through fixes to forgiveness programs that borrowers historically had trouble accessing.
The president’s budget builds on those efforts by further addressing the student loan crisis and offering more ways for people to get through their schooling without going into debt.

Biden’s presumptive Republican opponent, former President Donald Trump, called for slashing the U.S. Department of Education’s budget during his term in the White House.
In contrast, Biden is requesting additional funding for the agency — $82.4 billion for 2025, a $3.1 billion increase from 2024 — to subsidize educational costs for many Americans.

Bigger Pell Grants, fee cuts on student loans

Biden’s budget calls for increasing the discretionary maximum Pell Grant to $8,145, a $750 raise from the current level.
The federal Pell Grant program, signed into law in 1965, is one of the largest sources of financial aid available to college students. More than 6 million undergraduate students received the grants in 2020, and over 90% of recipients come from families with household incomes below $60,000, according to higher education expert Mark Kantrowitz.
“We fully support the administration’s commitment to increasing the Pell Grant,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending.
“This move signifies a crucial step toward enhancing access to education for all borrowers, but especially borrowers of color in underserved communities,” Herbin said.

The president’s budget also calls for eliminating origination fees on federal student loans, and $2.66 billion to support student loan borrowers as they return to repayment, including improvements to loan servicing.
Origination loan fees range roughly from 1% to 4% of the total amount borrowed.
“[An origination fee] not only reduces the amount of loan funds applied to their college bill, but it also adds expense and confusion to the process,” said Elaine Rubin, director of corporate communications at Edvisors.

Expand free community college

The president’s budget would expand free community college across the U.S. through a federal-state partnership.
“The free community college proposal is a big development,” Kantrowitz said. Subsidized community college, he added, “will make college much more affordable for low-income students and help them transition quickly into good-paying jobs.”

In addition, Biden proposes providing two years of subsidized tuition for students from families earning less than $125,000 and enrolled in certain schools, including a historically Black college and university and a tribally controlled college and university.
Biden also wants to establish a $12 billion “Reducing the Costs of College Fund,” which would create a new $7.2 billion program to provide states with matching funds to offer at least 12 free postsecondary credits to students in certain career-connected programs.

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