Picture of Christopher A. Hopkins, CFA

Christopher A. Hopkins, CFA

Loud budgeting is a TikTok trend to buy into

From “girl math” to “soft saving” to FOMO and YOLO, TikTok has inculcated millions of younger adults with trendy and often sadly unfortunate financial advice. A recent viral thread on the popular short form video platform is turning the tables, encouraging users to share their stories of thrift and responsibility. What started as a joke by a writer pushing back against spending culture could be a positive influence for a generation that prizes peer affirmation: loud budgeting.

Younger adults and Generation Z especially have often succumbed to unaffordable spending on luxuries in response to popular influencers and their ostentatious lifestyles. Last December, a 26-year-old comedian named Lucas Battle decided to push back against the pressure, challenging his friends on TikTok to cook at home and save their money. He coined the term “loud budgeting” in a viral video with nearly 12 million views, advocating for cutting spending, boosting savings, and making it feel cool by living it out online.

Social media is one of the most formative influences in the lives of 18 to 26-year-olds who comprise Gen Z and serves as a primary source of information, education, and cultural influence that has demonstrated powerful capability to shape behavior. Widely followed personalities often present aspirational images of wealth and consumption that can negatively affect financial decisions and are magnified by repetition and ubiquity. According to mobile data firm DCDX, this youngest generation spends nearly the equivalent of a 40-hour workweek each month interacting with TikTok.

Surveys consistently show that these heavily engaged users feel inordinate pressure to measure up to the lifestyles portrayed online and express inadequacy at not being able to attain them. They are also the most likely to choose pricier designer brands and frequently express buyer’s remorse in the aftermath. The hashtag #tiktokmademebuyit has collected over 9 billion views.

TikTok influencers identified a target rich environment. Despite unprecedented access to financial information and the adoption of personal finance instruction in half of the states, Gen Z demonstrates the lowest level of basic financial literacy according to the annual TIAA survey. This surprising deficit may be due in part to their outsized exposure to social media.

According to Betterment, 65% of this demographic accepts financial advice from social media, some of it good, much of it bad, and most of it insufficiently vetted or credentialed. Non-mortgage debt levels among Generation Z has more than doubled since 2021 just as student loan abeyance is ending, highlighting the need for good advice that is relatable to this age group.

TikTok itself is in many ways a tribute to financial illiteracy. According to research firm, the social media platform just became the first non-game mobile app to generate a cumulative $10 billion in direct consumer spending and is expected to surpass gaming apps like Candy Crush by year end. But consumers spending cash on TikTok are not purchasing handbags or running shoes; they are literally giving it away.

TikTokers purchase virtual tokens called coins through the Apple iOS and Google Play stores. These tokens are then used to reward content creators with tips in the virtual currency which they can redeem for cash, less TikTok’s 50% cut. In 2023, the most popular purchase was a bundle of 1,321 coins for $19.99, half of which the company pockets when the tokens are redeemed. Personal finance tip number 1: don’t send TikTok coins to Carli D’Amilio; she doesn’t need your emergency savings (ask your granddaughter).

TikTok is also under existential pressure from Congress. A wholly owned subsidiary of Chinese company ByteDance, the platform is the subject of legislation that would require either that TikTok be spun off completely from Chinese control or be banned from the US. Regardless of the outcome, social media platforms are likely to continue playing an oversized role in influencing younger consumers, so any constructive trends should be welcomed.

Loud budgeting may offer a counterpoise to the unrelenting pressure to emulate apparently successful influencers or the appeal of friends to indulge at the expense of your longer-term goals. Cheerleading for savings and budgeting may be especially valuable for a generation that famously shares everything on public platforms. “Sorry I can’t go out to dinner, I’ve got to live on $7 a day” is how Lucas Battle launched his soon to be viral counteroffensive, owning his priorities instead of apologizing or succumbing to peer pressure.

Now thousands of followers have caught on, declining expensive social invitations, and explaining why – in public on TikTok. Hashtag #loudbudgeting connects a robust community of like-minded budgeters publicly embracing a culture of delayed gratification, offering tips and encouragement, issuing budgeting challenges, and even suggesting scripts for responding to specific temptations. “I’d love to attend your $2,000 destination wedding, but it would cost me $30,000 in retirement”.

Loud budgeting is about putting financial goals ahead of immediate consumption and doing so publicly on the platforms shared by peers. The message: it’s ok to be responsible; it’s actually cool (if that’s the correct adjective these days). Expressing priorities in the online public square can help create a culture of accountability, like recruiting a workout partner who meets you at the gym.

At a time when TikTok is receiving so much negative attention, some of it deserved, it is worth noting when a viral trend is not an infection but an antidote.

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