Financial experts love TikTok's “loud budgeting” trend. Here's how it can help you save
“Hey guys, I’m not rich.”
Those are the words that the 20-year-old daughter of Joyce Marter, LCPC, financial therapist, recently told her mother she said to her college roommates when they started picking out expensive decor to divide amongst themselves for purchase.
While Marter, author of The Financial Mindset Fix: A Mental Fitness Program for an Abundant Life, didn’t know it at the time, her daughter Celeste was practicing “loud budgeting”, a recent trend amongst Gen Z and Millennials in which people are encouraged to prioritize their own mental and financial health and firmly express their financial limitations and boundaries.
When Marter shared this story with her Gen X friends, they all laughed with amusement that Celeste stated her financial limitations so openly and boldly. But Marter and her pals also admired her courage and candor. Just as Celeste’s roommates respected her for stating her feelings, Marter believes we all could learn from this way of thinking.
But what exactly is “loud budgeting?” And if you decide to embrace the TikTok trend, what are some guidelines for bringing the practice into your daily life? Ahead, we break down what you should know about this growing "FinTok" phenomenon popularized by TikTok creator Lukas Battle.
What is "loud budgeting"?
John Thompson, VP Financial Services of Spruce, the mobile banking platform built by H&R Block, defines loud budgeting as the concept of sharing your financial boundaries with friends and discussing them openly as you’re deciding where to spend your money.
“Loud budgeting separates worth from the ability to afford material possessions or costly experiences,” Marter adds, noting that the approach also enables us to stop meeting the expectations of others at the expense of our own wellbeing.
Many of us struggle with financial stress and financial shame in silence, which can exacerbate mental health challenges like depression and anxiety. That, and financial stress can cause resentment and disconnect in our relationships.
Per Marter, loud budgeting exemplifies having an internal locus of control (where we are in charge) rather than an external locus of control (where we are at the mercy of others), which improves self-esteem.
Similarly, Thompson believes that loud budgeting is a smart budgeting tactic. “One of the key indicators of financial health is that a person plans ahead financially,” says Thompson.
For some, being open about personal finances can result in the creation of accountability partners — just like going to the gym or partnering for dry January, for example. Plus, “in research for many years, we have seen the impact of commitment devices in improving health outcomes (including financial health outcomes),” stresses Thompson, who adds that those devices often help people achieve their goals.
Loud budgeting can relieve money pressure from social situations, so long as it is handled with awareness and sensitivity. “It can give a person an ‘out’ without being rude,” Thompson says.
What are the benefits of loud budgeting?
It seems that financial insiders are happy to see loud budgeting catapult into the mainstream. These pros think loud budgeting can be an excellent strategy for people to employ in their lives. Marter even summarizes the many benefits of loud budgeting as follows:
Reduced financial stress
Reduced negative emotions, such as shame, resentment and anger
Greater equanimity and mental calmness
Higher self-esteem and self-respect
Improved mental health
Improved financial health
Clarified financial boundaries in relationships
Financial empowerment
That said, there are some potential drawbacks of loud budgeting. Marter notes that these include disappointing or upsetting others, which could lead to relationship conflict. “As a therapist, I think prioritizing one’s wellness is best, as long as it is done with respect, empathy, self-awareness and compassion,” Marter tells TODAY.com.
How to practice loud budgeting
Be open-minded. Be mindful of the opinions of others when practicing loud budgeting. “When broadcasting your perspective, it's important that you keep your mind open,” says Thompson. “Talking about money — the complexities and emotions of it — is an opportunity to listen and learn.”
Hold yourself accountable. “Take responsibility for yourself and ownership of expenses that are yours to pay, otherwise you're infringing upon the financial wellness of others,” Marter says. Not only will you let yourself down if you don't abide to this principle, but you risk upsetting others.
Possess self-awareness. Along with this guidance, Marter says to be mindful of the words you choose, your tone and body language. “Be diplomatic, honest and clear. Set financial limits in person or voice to voice if possible, as this is usually better received than over text,” she says. It’s important to be thoughtful about the goals you’re expressing, and the different circumstances people are in, says Thompson. “For example, knowing that you’re saving for a $10,000 vacation might sting for your friend who’s trying to make rent this month.”
Reflect empathy. Along with showing empathy, Marter says you’ll want to show emotional understanding of how your loud budgeting may impact others. For example, you could say something like, “I understand you're probably disappointed and upset that I can’t make it for your birthday. I really love you and hope you can understand my need to practice financial self-care.”
Empower yourself and others. “Every group has different norms and comfort levels,” Thompson says. “Make sure you’re sharing with people who want to be mutually supportive.”
Ultimately, loud budgeting shouldn't come from a victim mentality or scarcity mindset. “The intention is for loud budgeting to be rooted in self-worth, self-love, an abundant mindset and conscious collaboration,” Marter says.
The bottom line: We could all benefit from adopting a healthy attitude about money to help combat feelings of inadequacy on social media. Through loud budgeting and increased money transparency, we can better support each other in achieving even our biggest financial goals.
This article was originally published on TODAY.com
