Let’s hear it for loud budgeting! I’m certainly a fan. I fully support practices that encourage financial self-expression with our friends and family – which is what loud budgeting does. Like any practice, there’s a good way and a not so good way to go about it. In this video, learn the best ways to use loud budgeting to improve your own finances and build deeper, more meaningful relationships with the important people in your life.

TRANSCRIPT:

What started as a Tik Tok joke has become a viral movement that helps stop overspending in its tracks. I love the concept of loud budgeting and I think there’s a right way and a wrong way to do it. If you haven’t heard of it yet, loud budgeting is when you say out loud to your friends or whoever you’re out that you can’t spend money on something.

So, before loud budgeting, if friends asked you to go out and you didn’t have the money or didn’t want to incur the debt, you’d just pass altogether and stay home. But now, instead of not going, you might say that a certain restaurant doesn’t fit in your budget and suggest another place or another activity.

The point is that you’re speaking up about your finances. You’re not avoiding going out with your friends because you’re watching your money but you’re also not silently spending money that you don’t want to be spending, just so you can hang out with your friends. I love that it requires you to talk about money, which encourages people to get comfortable speaking up about a subject that is still way more taboo than politics, sex, or religion.

Another huge plus is that loud budgeting means that you are budgeting! How exciting! I see so many people hate on budgets and tell you that you don’t need one. And I get it because before there were such things as values-based budgets with the built in flexibility of the SAVE budget I teach, budgets felt like a punishment. They were restricting and sucked all the fun out of life.

But a good budget is nothing like that, and if people are now budgeting and then sharing their budgets with their friends and family, then I am doing the happy dance. Why? Because this puts you solidly on the path to financial fitness and your life will be better for it.

But to me, there is a right and a not so right way to do this. Let me explain what I think is the best way to do loud budgeting. First, you have to create a budget that helps you spend in alignment with your values, not ego and then you have to double check that the budget is complete and accurate, meaning that it covers all your categories of spending and that the budget allotted for each category covers all the costs that belong to that category.

So for example, when people think of their car budget, they might think to budget for their car payment, insurance, and gas, but they forget to include things like parking, car washes, toll roads, maintenance, tires, and any car-related subscriptions or accessories. Only when you think through all the costs and figure out how much they are per year, broken down per month, will you get an accurate budget. I often hear people complain that budgets don’t work but that’s because the approach to budgeting is wrong. Budgets stand no chance of working if they don’t properly account for all your expenses.

The other reason it can seem like budgeting doesn’t work is that people miss the tracking piece. Creating a budget by itself will not ensure that you spend your money accordingly. You need a habit of tracking your spending monthly to see how well your spending was aligned with your budget. Without tracking, budgeting is useless. So be sure you’ve got a good, accurate budget to begin with, and set yourself with a method of tracking it monthly.

Then, and here’s where loud budgeting comes back into play, I would encourage you to share your budget with your friends and family soon after you create it. It’s best to let your friends know about it sooner rather than later. Hopefully before you’re in the situation where someone is suggesting an overpriced restaurant and you have to say “NO, I’m not doing that because this doesn’t fit in my budget!”

So rather than being the one that slaps down ideas, in a possibly rude way, you’re better off telling people earlier so that you can say, remember that budget I shared with you, this place you’re suggesting is not aligned with. How about we go somewhere like… and then suggest a place.

In fact, not only do I recommend talking to your friends and fam about your budget early, I hope that you’ll do it ongoingly. Maybe once a month, the topic of conversation is, how’d you do with staying on track with your budget last month? And offering support and suggestions and encouragement. Oh my gosh how amazing would that be?! Maybe as a group you’re like, yeah, we way over did it on entertainment last month, this month let’s see if we can figure out how to spend under budget on that. And then it becomes a group project, rather than feeling like you’re a lone soldier who just shoots people down when they make a budget unfriendly suggestion.

This can make a whole slew of things easier in life. Imagine how much less stressful getting gifts would be if everyone understood everyone else’s situation, and not just situations as in limitations but also the positives like their goals of paying off debt, saving up for a down payment or starting a business. Heck, maybe friends groups will start supporting their goals with financial gifts, rather than buying some product that won’t make as big of a difference to the quality of their life.

I also believe that conversations around money can lead to a deepening of friendships when you’re talking about money from the level of values. You really get to know and understand someone when you get to know their values. Your values are expressed in how you spend your time and money and so when you know how someone intends to spend their money, you know them on a more meaningful level.

Lastly, I can’t say enough about what this does for us as individuals to become comfortable expressing ourselves financially and what an impact a culture of financially self-expressed individuals can do to turn the tide on our overspending and resulting financial stress. So I hope that loud budgeting isn’t a fleeting trend and that it’s here to stay, like a millennial wearing skinny jeans.

What do you think? Let me know in the comments and I’ll catch you in the next video.