Loud Budgeting: What’s All This You’re Hearing About It?

Do your friends suggest going out to expensive dinners every weekend? Has your college roommate invited you to her destination wedding, which could cost thousands to attend? Have family members ever guilted you into contributing to extravagant group gifts for special occasions? If so, you may have wanted to say no, but felt uncomfortable doing so. A novel approach to personal finance, called loud budgeting, just might give you the “out” you seek.

What is loud budgeting?

The term loud budgeting has recently become very popular on social media with influencers touting it as a smart financial strategy. People who practice it prioritize their financial goals when making all money decisions, and they let others know this in simple and unapologetic terms.

Loud budgeting isn’t about saying ‘I can’t afford X, Y or Z,’ although that may be true. Instead, it’s about setting boundaries and vocalizing what you’re willing to spend money on.

Here’s an example: Sarah calls Katie and suggests they take a girls’ trip to the beach that will cost several hundred dollars. Although this sounds like fun, Katie has prioritized paying off her student loans, so she politely declines like this: I’m sure that would be fun, but I’m not spending money on trips right now so I can focus on some financial goals that are very important to me. Notice that Katie didn’t succumb to temptation, apologize for declining or say she couldn’t afford the trip.

When practicing loud budgeting, you can share as much or as little about your financial situation and goals as you want, whether it’s in person or on social media.

How can I put loud budgeting into action?

Follow these steps if you’re interested in adopting loud budgeting:

1. Start with a budget.

This strategy only works when you build and stick to a budget.

2. Identify your financial goals.

Spend some time determining your short-, medium- and long-term financial goals. For example, you might have short-term goals to pay off your credit card debt and build up an adequate emergency fund, a medium-term goal of saving for a down payment for your first home and a long-term goal of retiring early. As you complete this exercise, be realistic and specific about the amount of money and time needed to make each goal a reality.

3. Use budget rules.

Budget rules give you a framework for ensuring that the income from each paycheck is appropriately divided between essential bills, non-essential expenses and financial goals based on your priorities. Any time you receive a raise or bonus, make sure you adjust your budget accordingly so the extra money coming in doesn’t evaporate through lifestyle creep.

4. Determine who you want to share your goals with.

By intentionally identifying the people that you are and aren’t willing to reveal your specific financial goals to when loud budgeting, you’ll be prepared to respond to requests that involve money in a way that is comfortable for you. For example, you might decide that you’ll only reveal specific financial goals to family members when such requests come up. For everyone else, you might decide to simply use the catchall phrase some financial goals like Katie did in the above example.

5. Frame loud budgeting as a positive.

It’s empowering to take such firm control of how you make money decisions so that your spending is aligned with your goals. Communicate your use of loud budgeting from that perspective.

6. Suggest less expensive options.

In situations where you want to participate and there is a less expensive option available, lobby for the alternative. Say a friend suggests a group of you celebrate one of your birthdays at a pricey five-star restaurant. Offer up a different restaurant whose prices fit within your budget. There are probably others in the group who don’t want to spend a fortune either and will happily second your suggestion.

7. Share your success stories.

When you reach a financial goal or even a milestone for one, share it on your social feeds. This will help your friends and family understand why you’ve been so “loud” about your budgeting priorities.

What are the financial benefits to loud budgeting?

The most obvious benefit to loud budgeting is that it helps you identify and reach your financial goals because they are always front and center in your mind, and on your lips when people are asking you to spend money. But there are some less obvious benefits, too:

• Breeds encouragement and respect: When you say that you’re prioritizing your financial goals, family and friends will likely cheer you on and be respectful of this going forward. They may even offer up tips for reaching your goals faster.
• Helps avoid the comparison trap: Loud budgeting is the exact opposite of keeping up with the proverbial Joneses, which is mentally and financially exhausting.
• Inspires others: Once people see how empowered you are with your money, they may start prioritizing their own financial goals.
• Reins in lifestyle inflation: As your income increases, loud budgeting keeps lifestyle creep in check because you stay focused on your financial goals.

The only real downside to loud budgeting is that some people might not like your use of it. If you encounter a vocal critic, simply respond like this: Loud budgeting may not work for everyone, but it does for me, so I’m sticking with it.