EXPLAINER: What is loud budgeting and how can you practice it?
It's always a challenge to make smart money choices, especially if you often get the urge to splurge.
Enter loud budgeting, a new trend that helped Isabelle Daza better manage her financial situation.
In an interview on the Solo Flight Podcast, the actress and television host shared some of the lessons she learned about saving money, especially since inflation in the Philippines has made it hard for some to stay on track with their financial goals.
One strategy that she has been practicing is the so-called loud budgeting technique.
"Loud budgeting for me is in because of the situation I am in—plus having three kids, plus living in Hong Kong. It's not anymore as easy to say, 'Yeah let's go to a five-star hotel and have a Michelin dinner.' I'm gonna tell my friend, 'That is too expensive, this is my budget,'" Daza said.
"Parang loud budgeting is being true to what you can and can't afford. And it goes hand in hand with 'Don't go broke trying to look rich' because we all know that's not the place you want to be in," she added.
What is loud budgeting?
Financial planner Alyssa Balaoing told PhilSTAR L!fe that loud budgeting is a form of money management that encourages you to be transparent with other people about your finances.
“This could be through saying 'no' to expenses, events, or purchases that do not align with your budget and telling them straight away that your budget is the reason behind your decision,” she explained.
“This helps the people around you understand your financial situation. This also normalizes talking about money and empowers everyone to speak about their financial goals,” she added.
Despite the term going viral at the beginning of 2024, fellow financial wealth planner Danielle Fanlo said loud budgeting is still “not being practiced by a lot of people.”
“Most of us want to belong, and make people think that we can live up to the ‘standards.’ However, I personally practice this and I'm not ashamed to tell people that some things are not in my budget,” Fanlo asserted.
“When I do this, a lot of people get surprised by my honesty. I think that's why loud budgeting should be practiced more so that people could establish their financial limitations without shame. By doing so, more people could actually make some progress with their finances whether it's being more intentional with purchases or finally building up their emergency fund,” she added.
Additionally, this practice also creates an “environment among friends, family, or workmates that allow each other to feel proud about having some certain sacrifices in order to reach the bigger financial picture.”
How to practice loud budgeting
Interested in trying out this money-saving technique? Here are some tips you need to keep in mind.
Be open about your priorities
Balaoing advised to encourage conversations with your loved ones regarding your priorities over your money.
“Normalize speaking to your friends and family about your financial goals, and encourage them to do the same,” she said.
Set realistic financial goals
It’s also important to have realistic financial goals as these can provide you with a clear roadmap on what to do and help you stay focused on working towards financial success.
“Create realistic and time-bound financial goals: this gives you a sense of accountability and discipline,” Balaoing said.
It also helps to “learn about saving, investing, and wealth accumulation with your friends and family.”
Have deep conversations with yourself
If you’re having trouble coming up with your financial goals, Fanlo recommended having “deep conversations with yourself” in order to “dig deeper as to why these goals matter to you.”
It’s asking, ‘What would my life look like if I am not able to achieve these goals?’ or ‘How would I feel later on if I didn’t act on my goals?’ It’s a must to put all of these into writing,” she said.
She continued, “Speak these out loud for yourself first and firmly believe in them. Once you’ve set these financial boundaries, the next step is to gather some friends or family and initiate that conversation with them.”
Celebrate your wins
According to Balaoing, it's always good to pat yourself on the back whenever you've achieved financial wins, no matter how small they may be. "This can help keep yourself motivated and strengthen your drive to keep up with your positive financial habits."
Since money-saving can also come with a lot of setbacks, she also noted the importance of reflecting on the mistakes you've faced in order to make better decisions moving forward.
