Many social situations can come with strong pressure to spend money. For example, a group of friends might invite you to a concert or sporting event this weekend, but you might not have the budget to buy tickets. A family member might invite you to a fun vacation, but you might not be able to afford the cost of lodging and food.
Instead of making up an excuse not to go, or even worse, going anyway and charging the cost to your credit card, a new social media trend called “loud budgeting” might be a better approach.
Loud budgeting is a money management strategy that encourages you to be honest with your loved ones about your financial goals, and this social media trend has helped make talking transparently and openly about money the norm for many people.
Read on to find out more about what a Loud Budget is and how it works, including the benefits of a Loud Budget and tips for implementing this financial strategy into your own life.
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What is a loud budget and how does it work?
LOUD BUDGETING is a financial management strategy that helps you say “no,” especially to social activities that don’t align with your financial goals. It’s a way to set and verbalize financial boundaries with family and friends, being honest and communicating which expenses do and don’t fit into your monthly budget. Instead of saying, “I don’t have money to spend,” explain why you choose to spend your money in other ways.
By joining the budgeting trend, you’re helping to remove the taboo around talking about money — in other words, embracing the idea of financial transparency.
Maybe you’re cutting back on unnecessary spending because you want to pay off credit card debt. Or maybe you’re trying to build up an emergency savings fund or save for retirement. Whatever your financial goals are, budgeting out loud allows you to talk to friends and family about the financial goals you’re trying to achieve and why you need to hold back on spending outside of your financial plan in the meantime.
Read more: How to save $10,000 in one year
The benefits of a big budget
There are many potential benefits to having a loose budget in place. Here are a few examples:
Accountability: If you have supportive family and friends, sharing your financial goals can help you stay accountable to the personal financial goals you’re trying to achieve.
Inspiration: Speaking openly with loved ones about your personal money goals may inspire family and friends to avoid bad financial habits like overspending and work toward their own money goals.
Avoid regret: Often times, people feel obligated to accept social invitations from family and friends because they don’t want to disappoint others, but creating an extensive budget will allow you to turn down invitations (and the additional costs that come with them) by talking about your financial situation and priorities.
How to fit a big budget into your life
Budgeting starts with a financial plan, or budget. If you don’t already have a budget in place to manage your money, consider the 50/30/20 strategy or zero-based budgeting to see if either of these approaches is right for you. It’s also important to learn the difference between fixed and variable expenses and how to budget for each.
Once you’ve chosen your money management strategy, here are some helpful tips to help you implement budgeting into your life.
Set financial priorities
Being able to communicate your money goals to others is important to implementing an effective budgeting strategy, but remember that it’s okay to share as much or as little information with friends and family as you feel comfortable.
For example, you might want to tell certain friends that you have to miss a social event because it’s simply not in your budget, but you might not feel comfortable telling a close family member that you’ve decided to skip dinner because you’re working hard to pay off your credit card debt.
Find an accountability partner
Consider enlisting a key family member or friend as an accountability partner on your budgeting journey. As you learn how to stick to a budget and avoid overspending, some of you may feel more comfortable posting your successes (and failures) on social media.
Suggest an alternative
Sticking to a budget doesn’t mean you can’t enjoy life or have no time to spend with family and friends.
First, you can leave room in your budget for these expenses, but if a loved one invites you to a pricey meal or entertainment event that doesn’t fit into your budget, don’t be afraid to suggest a more affordable alternative, so you can spend time with the people you care about without sacrificing your financial priorities in the process.
If you want to occasionally partake in fun activities, vacations, and events with your loved ones, there’s nothing wrong with doing so. And if you’re worried that these expenses will derail your financial goals, consider finding alternative ways to raise extra money.
Taking on a short-term side hustle might be worth considering if it helps you achieve your financial goals and gives you some much-needed extra cash.
Is extensive budgeting right for you?
Setting a budget in a big way can be a good way for people who feel they need to set clearer boundaries when it comes to spending. For many of us, the idea of turning down a social invitation can be awkward — after all, you don’t want to hurt your friends and family’s feelings — but there’s no need to feel guilty about sticking to your money goals.
Sharing your financial goals with those closest to you will boost your self-confidence. Plus, planning your budget out loud will not only set you up for success, but it might even inspire your friends and family to start working towards their own financial goals.
Read more: How to save $1,300 in a year with the 52-week savings challenge
