Can loud budgeting change your financial life?

Pop quiz: Have you ever heard of the Chubby Bunny, Harlem Shake or Kylie Jenner challenges? If you haven’t, take it as a win. They are social media trends, and like 99.9% of all social media trends, they are too ridiculous to explain. And while social media is not usually a place to seek financial wisdom or improve your financial literacy, is “loud budgeting” an exception?

WHAT’S LOUD BUDGETING?

Loud budgeting was popularized by comedian Lukas Battle on the social media platform TikTok, known for its silly short videos and viral trends. So, how on earth would a TikTok video aimed at Generation Z 20-somethings and created by a comedian harbor financial wisdom? Hear us out.

In short, loud budgeting is when you’re asked in a social situation to spend money on something, and you decline by openly declaring that it’s not within your budget.

By doing so, you're setting clear financial boundaries and taking control of your spending habits.

If you’re loud budgeting because of a financial goal you’re trying to achieve – like saving for a down payment, building an emergency savings account or paying off credit card debt – go ahead and declare the goal too.

Perhaps some of us with pushy, fancy friends have already fantasized about a version of loud budgeting at some point, even though we didn’t call it that. Maybe you weren’t saying no to all-night clubbing due to student loans, but what if you substitute “clubbing” for “persistent invitations to expensive dinners, shopping sprees or exotic vacations”? Take out the goal of “paying off student loans” and insert “boosting your retirement savings” or “contributing to a 529 plan” for your child’s education. By asserting your financial priorities, you are taking charge of your personal finance journey.

THE POWER BEHIND LOUD BUDGETING

Through its public declarations, loud budgeting can help keep you accountable to your savings goals and keep you on track. Openly discussing your financial limits allows you to embrace financial transparency and take responsibility for your money decisions.

“You have to be careful of budgets,” says planner Ken Murray, Executive Director, Financial Planning at Edelman Financial Engines. “Budgets are like diets; eventually people break them due to financial stress or lack of clear financial goals. But if loud budgeting helps make you accountable to your savings goals, then go for it.”

Murray says budgets are effective when they are used as a tool to save rather than just rein in expenses. Focusing solely on expenses can lead to a fruitless game of financial shame or frustration, where you cut back spending without a purpose. “Budgets have to be attached to a savings goal,” he says. “Having a financial plan and budgeting strategies that align with your money goals can make all the difference.”

Yet, loud budgeting can be a challenge for some.

You need to say “no” to friends or family who like to spend, and it encourages you to be transparent about your financial goals.

This can bring about feelings of social pressure or fear of judgment, especially if your financial situation is different from that of your peers. In a society where talking about one’s finances in social situations can be taboo, that can be hard. It can be even harder if you’re introverted or struggling with financial stress. However, it may help if you think of loud budgeting as gaining power over your finances and establishing clear financial boundaries. It’s okay to prioritize your financial health and money management over impulse purchases or unnecessary spending.

“Don’t say to people, ‘I can’t,’ but rather, ‘I’m choosing to do something else with my money,’” says planner Kelli Smith, Director, Financial Planning at Edelman Financial Engines. “Loud budgeting is about publicly honoring your needs and your goals and claiming power over your finances. It's about taking control of your personal finance and making budgeting decisions that align with your financial priorities.”

Little by little, those choices could help you achieve your savings goals.

RESIST SOCIAL PRESSURES

If you’re not comfortable stating why you’re making the choice not to spend, you don’t have to explain yourself, Smith says. “Reminding yourself of your financial priorities and savings goals can be enough to keep you on track,” she adds. Using tools like budgeting apps or keeping a journal of your financial journey can also help reinforce your commitment to your financial strategy.

Keep in mind that well-meaning friends who find out about your savings goals may want to offer financial advice. However, what may be good for their financial circumstances and temperament may not be good for yours. Their traditional budgeting methods might not align with your personal finance situation or financial strategy.

Stay on your own track, especially if you have thoughtfully created savings goals with your financial planner. Remember, your financial well-being is uniquely yours, and your budgeting goals should reflect your personal financial journey.

Your financial planner is always there to provide support, so don’t hesitate to reach out to them. They can help you refine your financial plan, adjust your budgeting techniques and offer guidance on navigating financial stress or debt management. By working with a professional, you can gain valuable financial information and education to make informed money decisions.