Gen-Z in perfect sync with loud budgeting tunes

Amid the hullabaloo of the much-awaited Interim Budget 2024 in India, the trend of ‘Loud Budgeting’ has smitten Gen-Z via social media. Simply put, ‘loud budgeting’ is being vocal about one’s financial constraints and channelling money toward purposeful savings goals. The trend is quite the opposite of ‘quiet luxury’. It emphasizes “I don’t want to spend” instead of “I can’t afford.” Thus, articulating your priorities to people around you.

Tarun Nazare, Co-Founder & CEO of Neokred Technologies says, “This approach is a response to the over-glamorization of luxury and the financial strain caused by social media culture. It advocates mindful spending and prioritises long-term goals like savings and debt repayment over societal pressure to spend. It aligns with the desire for authenticity and transparency in personal finances for the young generation.”

Different Demographics

There is a humongous demographic of the young generation in India. There is a section of people who avoid or refuse to socialise to save money thus, live in FOMO (fear of missing out). The second criteria of people are the ones who find like-minded people and create a niche group of friends which leads to mutual understanding within the group and transparency as well. The third section of people are upfront and explicit about their finances and follow a strict routine to live a well-disciplined life. Chitranshi Yadav (25), a student of IIM Indore says, “As a student, a lot of money is spent on conveyance, food, facilities, parties etc. I have told my friends that my monthly expenditure budget is Rs 5,000. At times I tell them that I will cook homemade food for them instead of splurging on junk food.”

Spend Wisely, Save More One of the core tenets of loud budgeting is visibility. It is about bringing financial plans out of the shadows and into the spotlight. Loud budgeting ensures that financial decisions are not concealed but laid bare for everyone involved. It counters the social media-driven pressure to display a luxurious lifestyle, shifting the focus to mindful spending and financial goals. In India, the younger generation holds significant sway in consumer spending, driven by growing income and increased purchasing power. Despite their economic empowerment, they grapple with heightened stress and anxiety, partly stemming from societal and peer pressures exacerbated by perpetual connectivity to global news and social media. This exposure often leads to a sense of inadequacy as they compare their lives with others. Arpit Arora, a Personal Finance Coach says, “Twenty years ago, people were secretive and did not want to disclose much about their finances as well as other things like menstruation etc. This trend reflects the same behavioural change that is happening with today’s generation (i.e. being more expressive and transparent).”

Budgeting Pros & Cons

Embracing loud budgeting offers a multitude of advantages. It encourages saving more by openly discussing and normalising responsible financial management that aligns with personal values, steering away from a false sense of prosperity. It provides liberation from the stigma associated with debt and budget discussions, fostering a sense of freedom. Prompting individuals to candidly acknowledge and accept their financial situations, encourages self-acceptance. Loud budgeting helps people embrace the Joy of Missing Out (JOMO) instead of the Fear of Missing Out (FOMO). Tarun highlights the drawbacks of loud budgeting, “It could lead to a sense of peer pressure or competition in financial matters, potentially causing discomfort or stress for those who are less financially secure. Additionally, the emphasis on openly discussing finances might not align with the more traditional views on privacy regarding money matters in some Indian cultures.”

Financial Self-discipline

It is about both self-discipline and setting financial boundaries with others. This self-check helps align financial behaviour with long-term objectives. It involves communicating financial limits to peers, which assists in managing social spending pressures. Priya Krishnamoorthy, a Personal Financial Advisor says, “When we know the purpose of our money then both the criteria are established simultaneously. Many people lend money to friends/family as their money's just 'lying' in savings accounts without a purpose. Hence, it’s very important to tell your money where to go and for what purpose.” Arpit advises, “Communicating to yourself is the first step.”

Inflation is not solely to be blamed, convenience and luxury of choices are also to be put on the red spot. Arpit explains, “There are a lot of convenience spending happening today which did not exist in the past. And because it is now aided by the convenience of paying online, everyday spending has substantially increased. The luxury of choices has changed the human psyche into sporadically spending even on things that are not essential but affordable.” He highlights that budgeting should no longer be a choice but mandatory for everyone to keep their finances in check.

This approach is a response to the over-glamorization of luxury and the financial strain caused by social media culture.” — Tarun Nazare, Co-Founder, CEO, Neokred Technologies

Communicating to yourself is the first step. And second is the expression of that to the person you trust.” — Arpit Arora, Personal Finance Coach