There are many finance trends that have become popular with Gen Z. Unlike a lot of trends, such as the viral and dangerous TikTok challenges, many of these trends are great ways to help anyone better manage their money. Over the next few articles, we’re going to talk about some of them that we think are particularly helpful and some that should be avoided at all costs. But first, let’s talk about loud budgeting.
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What Is Loud Budgeting?
Personal finances are one of those topics that are, in general, frowned upon in conversation. Many people consider it a faux pas to talk about money at all. Loud budgeting turns this on its head. Instead of being embarrassed to talk about finances, this trend encourages you to speak up.
Instead of lying to your friends or making up excuses to avoid spending money, say that you are on a budget and that you intend to stick to it.
According to Bloomberg, loud budgeting is all about encouraging each other to make and keep your goals.
Definition
So what does loud budgeting actually mean? CNet explains, “Loud budgeting is a financial strategy that puts your money aspirations front and center for friends and family to see”. You may have heard the phrase “it takes a village to raise a child”. This strategy says, “it takes a village to stick to your budget.”
Best Practices
This strategy does not work if you do not talk about your budgetary needs, if you do not create a village to hold you accountable. “Loud budgeting involves clearly vocalizing why you might choose not to spend money — even if you have it” (CNet). By sharing your money goals, you are more likely to stick to them.
Examples
Here is an example of how this can be used effectively. You have a total of $100 of “fun money” budgeted for the month. You used $20 to go to the movies and get overpriced (but delicious) popcorn. You go out for drinks after work and spend another $20 dollars. Your friends decide they want to go see the new up and coming band The Financial Disasters. The tickets are $70 a piece. This is outside of your budget. You tell your friends that you are not going to the concert because it is outside of your budget for the month.
Why It Helps
Part of why this approach works so well is that it encourages you to build an accountability network. You hold your friends accountable to help them reach their goals, and they do the same for you. By creating a team, you encourage each other to stick to your goals.
Not only that but, like NerdWallet explains, “Strengthening your boundary-setting and communication skills, and holding yourself accountable, can help you save more money to put toward your goals”.
The Psychology Behind It
As more people are hopping on this trend, psychology is taking a closer look as to why this may help people achieve their financial goals.
Money.com discusses this further and states “loud budgeting can make people feel less alone and more empowered — especially in a world where social media can amplify one’s desire to keep up with the Joneses”. Instead of purchasing newer and better things to fit in with your neighbors, you “keep up with the Joneses” by consistently keeping to your budget.
How To Start
In order to be held accountable to a goal, you need to have SMART (specific, measurable, achievable, relevant, time-bound) goals. We talk more about these goals in this article. Once you have these goals, don’t be afraid to loud budget. Share your goals with your friends, and don’t shy away from telling others no if it is going to detract from those goals. By doing this, you’ll be able to reach that first million even faster.
The best way to loud budget is within a group dynamic. The group dynamic itself is what makes it successful. If you either do not have a network of like-minded friends or do not yield to peer pressure, then this might not be the best budgeting method for you, and that is okay. Not every budgeting strategy is for everyone. The key is to find the one that works best for you.
