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Are you ‘loud budgeting’ or ‘doom spending’? Finance according to gen Z

Are you ‘loud budgeting’ or ‘doom spending’? Finance according to gen Z

January 31, 2024

"Online Platforms, Particularly TikTok, Take Center Stage in Filling Gaps Left by Traditional Education"

Financial Literacy Gaps in Traditional Education

In the realm of subjects often overlooked by the US education system, financial literacy takes the lead, surpassing even sex education. A Forbes Advisor survey revealed that a staggering 79% of Americans aged 18 to 41 seek financial advice on social media, with TikTok emerging as a prominent platform for personal finance discussions.

Gen Z Reclaims Financial Literacy

Gen Z has revitalized the traditionally dry topic of money management, introducing catchy terms like "loud budgeting," "soft spending," and "cash stuffing." These terms reflect a cultural shift, as young adults navigate financial challenges in the wake of a cost-of-living crisis and a challenging housing market.

Loud Budgeting: A TikTok Trend Goes Viral

TikTok comedian Lukas Battle popularized the term "loud budgeting" in 2024. His advice, urging viewers to be unapologetically thrifty by canceling plans or delaying non-essential purchases, gained significant traction. The concept encourages individuals to embrace a more chic and stylish approach to money management, aligning with the idea that wealthy individuals often prioritize frugality.

Doom Spending and the Temptation to Splurge

While "doom spending" may seem like a whimsical term, it captures the phenomenon of making unnecessary purchases as a form of self-soothing during challenging times. Despite its potential pitfalls, many Americans succumb to this behavior, contributing to record-breaking holiday shopping figures, as reported by the National Retail Federation.

Soft Savings and a Balanced Lifestyle

In response to the hustle and grind culture, an offshoot of the "soft life" craze has given rise to "soft savings." Advocates of this approach emphasize using finances to enhance one's quality of life, prioritizing experiences such as travel or pursuing hobbies over accumulating wealth.

Cash Stuffing: An Age-Old Concept with a Modern Twist

"Cash stuffing," a practice reminiscent of budgeting with envelopes, has been given a contemporary name by Gen Z. The physicality of cash, proponents argue, makes expenses more tangible and helps curb unnecessary spending.

Money Dysmorphia and the Wealth Perception Dilemma

The term "money dysmorphia" draws a parallel to the mental health condition of body dysmorphia. This concept highlights the disconnect between one's financial reality and their perception, particularly evident among high earners who, despite substantial incomes, report living paycheck to paycheck.

The Call for Mandated Financial Literacy Classes

As these viral trends permeate online platforms, there is a growing realization of the need for comprehensive financial education. The emergence of financial terms on platforms like TikTok underscores the necessity for mandated financial literacy classes, ensuring a more informed and empowered populace.