Issue #220: We're being 'obnoxiously cheap' in 2024

Hi y’all —

Welcome back to Dollar Scholar! Is Jan. 10 too late for me to wish you a happy New Year? (Who cares? Happy New Year!)

So far in 2024, I’ve spent a lot of time scrolling through in/out lists on social media. Many of these new-year trend posts have declared “quiet luxury” out and “loud budgeting” in.

Thanks in part to the vibecession, quiet luxury was big in 2023. As you may remember from Succession or the Gwyneth Paltrow trial, it centers around subtly showing off one’s wealth. Loud budgeting, on the other hand, is a new concept in which you make your frugal mindset obvious.

“It’s not ‘I don't have enough,’ it’s ‘I don’t want to spend,’” as creator Lukas Battle put it in a video with over 1.3 million views. Or: “‘Sorry, I can’t go out to dinner — I’ve got $7 a day to live on.’”

The more posts I see, the more curious I am about whether this might be a legit money-saving technique. Could loud budgeting actually work? What are the pros and cons?

Julie O’Brien, SVP and head of behavioral science at U.S. Bank, tells me that loud budgeting can make people feel less alone and more empowered — especially in a world where social media can amplify one’s desire to keep up with the Joneses.

“They are saying there is no shame and guilt in their financial situation,” O’Brien says. “They are just saying, out loud, that healthy management of their money is something they value more than consumption and the curated, unrealistic ideals they see portrayed.”

As Brian Ford, a Northwestern Mutual wealth management advisor, points out, young people are facing hurdles like the recent return of student loan payments, lingering effects of record inflation and high interest rates. It makes sense, then, that they would want to spend meaningfully, “prioritizing their financial well-being” over something like a handbag or coat, he says.

The sheer fact that people are thinking critically about their spending is a huge step. So is publicly discussing it.

Talking about money is notoriously awkward, but loud budgeting encourages you to embrace it. This, too, has a perk: Like with regular New Year’s resolutions, telling others about your commitment to saving money can increase accountability, making it more likely you’ll follow through.

“Many people can identify with having to prioritize essentials like food and housing over disposable expenses, and loud budgeting is giving people a community where making those difficult-but-responsible choices can be celebrated,” Ford says.

To be clear, it’s not a perfect method.

Ben Markley, a personal finance educator and content creator for YNAB, gives the example of sassily turning down a request from a friend to get drinks at a local bar. Maybe I’ll save a few bucks, but I risk alienating my friend and denying myself some much-needed personal connection.

“Broadly being like ‘Anything that sounds expensive, I'm just gonna say no to’” isn’t quite the right approach here, Markley says. Instead of blindly following the loud budgeting trend, he suggests using it as an opportunity to make sure my spending/saving habits are aligned with my goals.

Using an app, spreadsheet or even just a note on my phone, I can write out what I’m hoping to accomplish, how much I think it’ll cost and how I plan to afford it. That way, the next time my friend asks me to drinks, I can make an informed decision.

“That empowers me to say, ‘I'd like to do that, but I really want to go to Colorado next summer,' or 'I really want to get these student loans paid off,'” he adds. “It also empowers you to say, ‘Actually, yeah, I decided this was important to me. I made space for it with my money. And so now I can say yes with confidence.’”