How to embrace loud budgeting in 2024

January can be a tough month financially, from gaps between paycheques to the aftermath of festive spending. Forty seven per cent of Brits admitted that they are heading into 2024 feeling worried about money. 

Following a new nationwide survey revealing that nearly a third of UK adults are avoiding checking their bank account due to their financial situation, credit management company Lowell are encouraging Brits to face their finances head on, which coincides with the new TikTok finance sensation "loud budgeting"—a trend that encourages being completely transparent about your finances, taking away the negative stigma behind discussing any money issues.

Discussing money often evokes a range of emotions, as revealed by the survey. Despite the importance of open communication about finances, 17 per cent of respondents admitted feeling uncomfortable discussing money, while 25 per cent reported feeling anxious, stressed, or ashamed.

Breaking down these barriers can lead to empowerment, with 20 per cent expressing a sense of control when openly discussing their financial situation. Interestingly, the survey highlights a gender disparity, with 31 per cent of men feeling comfortable talking about finances compared to 19 per cent of women.

"Loud budgeting" is a trend that has emerged on social media that was first introduced by TikTok user Lukas Battle. It's the idea of being outspoken about what you will and won't spend your money on, and not being ashamed to admit when you don't want to splurge.

According to behavioural finance expert Brian Portnoy, being transparent about your finances is healthy. He argues that it is part of a generational shift in which talking openly about finances is socially acceptable, helping people to be less uncomfortable or ashamed about their money situations.  

With 22 per cent of respondents admitting to avoiding seeking professional financial advice, Lowell suggests starting the conversation with oneself as a crucial first step in gaining control over one's financial wellbeing. To guide individuals on this journey, Lowell's financial experts recommend addressing five key conversation topics.

Begin by identifying your long-term financial objectives, such as clearing debt or saving for retirement. Setting tangible goals provides a clear focus, making it easier to allocate resources and save each month.

Anticipate and address potential hurdles preventing the achievement of financial goals. This might include outstanding debts or concerns about the impact of financial issues on mental health. Identifying and overcoming these barriers is essential for progress.

Select a budgeting system that suits your lifestyle and financial goals. The 50/30/20 system, allocating 50 per cent to necessities, 30 per cent to wants, and 20 per cent to savings and debt repayment, is one example. Tailor the budget to your unique circumstances for a more effective strategy.

Given that 20 per cent of respondents lack confidence in their financial knowledge, investing time in financial education is crucial. Explore online resources, from Reddit threads to financial blogs, to enhance your understanding of financial products, services, and terms.

Evaluate your spending habits and prioritise expenses. Ensure essential needs such as food, housing, utilities, and transportation are covered. If dealing with debts, prioritise payments for critical obligations like council tax and rent.

Commenting on the tips, John Pears, CEO of Lowell UK, says,"As we move into the New Year, taking control of your finances can help set us up for good habits for the rest of the year. Not only can this have a positive impact on our financial health, but it can help us realise our goals in other ways from mental wellbeing to social wellbeing.

"Mental health affects people across the nation, all year round. With debt being a large trigger for many people’s mental wellbeing, having an open and honest conversation with yourself, and eventually, your wider support network can help alleviate negative feelings around finances. We’d like to remind anyone feeling financial pressure to reach out for support, and a list of organisations who can help can be seen at www.lowell.co.uk."

As the UK faces financial uncertainties in the new year, Lowell's encouragement to embrace "loud budgeting" and engage in open financial dialogues is timely. By addressing these internal conversations, individuals can take significant strides toward gaining control over their financial futures, breaking down the stigma associated with discussing money, and ultimately fostering financial wellbeing.