“Hey guys, I’m not rich.”

Those are the words that the 20-year-old daughter of Joyce Marter, LCPC, a financial therapist, recently shared with her mother. She recounted saying this to her college roommates when they began selecting pricey decor items to split the cost among themselves for purchase.

While Marter, author of "The Financial Mindset Fix: A Mental Fitness Program for an Abundant Life," wasn’t aware of it at the time, her daughter Celeste was engaging in "loud budgeting," a recent trend among Gen Z and Millennials. This approach encourages individuals to prioritize their mental and financial well-being by firmly expressing their financial limitations and boundaries.

When Marter shared this story with her Gen X friends, they all chuckled with amusement at Celeste's candidness about her financial limitations. However, Marter and her friends also admired Celeste's courage and honesty. Just as Celeste's roommates respected her for expressing her feelings, Marter believes that we could all benefit from adopting this mindset.

But what exactly is “loud budgeting?” And if you choose to embrace this TikTok trend, what are some guidelines for incorporating the practice into your daily life? Ahead, we'll delve into what you should know about this emerging "FinTok" phenomenon, popularized by TikTok creator Lukas Battle.

What is "loud budgeting"?

John Thompson, VP of Financial Services at Spruce, the mobile banking platform developed by H&R Block, defines loud budgeting as the practice of openly sharing your financial boundaries with friends and discussing them as you collectively decide how to allocate your money.

“Loud budgeting separates worth from the ability to afford material possessions or costly experiences,” Marter adds, emphasizing that this approach empowers individuals to prioritize their own well-being over meeting the expectations of others.

Many of us grapple with financial stress and feelings of shame in silence, which can worsen mental health issues such as depression and anxiety. Additionally, financial stress can lead to resentment and strain in our relationships.

@emma02115 Loud budgeting!! Over consumption and overspending is out in 2024 #loudbudgeting #budget #moneytoks #budgeting #postgrad #save ♬ original sound - emma | budget content

According to Marter, loud budgeting epitomizes having an internal locus of control, where individuals are empowered and in charge of their financial decisions, rather than an external locus of control, where they feel at the mercy of others. This shift toward internal control can enhance self-esteem and feelings of empowerment.

Similarly, Thompson believes that loud budgeting is a savvy budgeting strategy. "One of the key indicators of financial health is a person's ability to plan ahead financially," says Thompson.

For some individuals, being open about personal finances can lead to the establishment of accountability partners, similar to having a workout buddy or participating in activities like Dry January. Additionally, "research has shown for many years the impact of commitment devices in improving health outcomes, including financial health outcomes," emphasizes Thompson. He adds that these devices often assist people in achieving their goals.

Loud budgeting can alleviate financial pressure in social situations, provided it is approached with mindfulness and sensitivity. "It can offer a person an 'out' without being impolite," Thompson notes.

What are the benefits of loud budgeting?

It appears that financial experts are pleased to see loud budgeting gain traction in the mainstream. These professionals believe that loud budgeting can be a beneficial strategy for individuals to adopt in their lives. Marter even outlines the numerous 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

Indeed, while loud budgeting offers numerous benefits, there are also potential drawbacks to consider. Marter highlights that these drawbacks may include disappointing or upsetting others, potentially leading to relationship conflict. She emphasizes that as a therapist, she believes prioritizing one's wellness is paramount, as long as it is approached with respect, empathy, self-awareness, and compassion.

It's important to acknowledge that while loud budgeting can have its benefits, there are also potential drawbacks to consider. Marter points out that these drawbacks may include the possibility of disappointing or upsetting others, which could potentially lead to relationship conflict. As a therapist, Marter emphasizes the importance of prioritizing one's wellness, but also stresses the significance of approaching it with respect, empathy, self-awareness, and compassion.

How to practice loud budgeting

Thompson emphasizes the importance of maintaining an open mind and being mindful of the opinions of others when practicing loud budgeting. He suggests that when sharing your perspective on financial matters, it's crucial to keep an open mind and view conversations about money as opportunities to listen and learn from others. This approach can foster constructive discussions and mutual understanding among individuals with different financial perspectives and experiences.

Marter emphasizes the importance of holding yourself accountable when practicing loud budgeting. She advises taking responsibility for your own expenses and ensuring that you fulfill financial obligations that are yours to pay. Failing to do so not only impacts your own financial wellness but can also disrupt the financial harmony within relationships. By holding yourself accountable and owning up to your financial responsibilities, you demonstrate respect for yourself and others, fostering trust and stability in your financial interactions.

Marter emphasizes the importance of self-awareness when practicing loud budgeting. She advises being mindful of the words you use, your tone, and your body language when discussing financial boundaries. It's essential to be diplomatic, honest, and clear, especially when setting financial limits in person or through voice communication. Marter suggests avoiding discussing sensitive financial matters over text, as face-to-face or voice conversations are generally better received.

Additionally, Thompson highlights the significance of considering different circumstances and being thoughtful about the goals you express. He suggests acknowledging that your financial goals, such as saving for a vacation, may not align with the financial circumstances of others. For example, sharing your plans to save for a $10,000 vacation might be insensitive if a friend is struggling to cover rent for the month. Being mindful of these differences in financial situations can help maintain understanding and respect among friends and family members.

Marter emphasizes the importance of demonstrating empathy and emotional understanding when practicing loud budgeting. She suggests acknowledging the potential disappointment or upset that your financial boundaries may cause others and expressing empathy towards their feelings. For instance, you could communicate your understanding of their emotions by saying 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."

By acknowledging the impact of your financial decisions on others and expressing empathy towards their feelings, you can foster understanding and maintain positive relationships while still prioritizing your financial well-being.

Thompson emphasizes the importance of empowering yourself and others when practicing loud budgeting. He suggests sharing your financial boundaries and priorities with individuals who are supportive and understanding of your goals. By surrounding yourself with people who are mutually supportive and respectful of each other's financial well-being, you can create a positive environment where open discussions about money are encouraged and empowering for everyone involved.

Indeed, Marter underscores that the practice of loud budgeting should not stem from a mindset of victimhood or scarcity. Instead, it should be grounded in a sense of self-worth, self-love, abundance, and conscious collaboration. By approaching financial discussions with these positive intentions, individuals can foster healthier attitudes toward money and support each other in achieving their financial goals.

In essence, adopting a mindset of abundance and practicing loud budgeting can contribute to greater financial transparency and support among peers, ultimately leading to more empowered and fulfilling financial lives for everyone involved.