A Viral Tip For Realistically Budgeting Without Dropping What You Love
In 2022, U.S. inflation rose to its highest level since the 1980s, mostly due to the war in Ukraine and the pandemic causing a global recession, per Reuters. As a result, 2023 is turning out to be the year of the budget. In a Meridian Credit Union survey (via The Financial Post), nearly 75% of millennials who responded reported having financial anxiety, or "a pit in my stomach," due to inflation, with 62% worried about losing their money going forward. Yes fam, this is your sign that you need to find some innovative ways to economize.
Maintaining a healthy balance between buying what you love and staying within your means is super important, which is why you need to follow some budget rules. But where to start? Enter TikTok user @financielle, who posted a viral video to the platform gushing about the benefits of establishing a realistic budget while still prioritizing purchases that bring you genuine joy and satisfaction. The video, which already has 114,000 likes, outlines a few bullet points to follow to keep your finances on track every month without restricting what you love. Here's what we love — and don't love — about her suggestions.
Don't make your budget too restrictive or it's doomed to fail
TikTok user @financielle, which is a budget app for young people, suggests abandoning the idea of restrictive budgeting, warning that denying yourself every pleasure or indulgence is destined to fail. Retail therapy is a real thing, fam! Purchasing something you truly love can positively impact your emotional well-being and quality of life, per Healthline. However, don't abandon fiscal responsibility, thinking ahead, planning out your financial goals, and finding ways to economize.
Another suggestion we love here is the idea of building an emergency fund for those rainy days when you have an unexpected illness, your car suddenly dies, or your home goes up in flames. Setting aside funds each month toward an emergency fund can really prevent major financial worry in the future, especially when you didn't see the hardship coming.
@financielle also suggests you identify what your goals are and save accordingly. Are your goals short-term, like buying a car, saving for a trip, or buying a home? Or maybe your goals are long-term, like planning for retirement? In either case, identifying these goals, saving up, and sticking to them can be motivating, and help add structure to your monthly spending habits.
These suggestions are better suited to those with little-to-no debt
One of the issues we have with @financielle's viral budgeting hacks is that they seem to be geared toward those with an excess of funds, or perhaps those who don't live paycheck-to-paycheck. Her suggestion to sink money into a "Starbucks fund" so that your daily indulgence doesn't dip into your savings is a good idea in theory, but it doesn't acknowledge that not everyone has extra cash lying around. So many young people have student debt accruing interest, and all of their extra cash goes to paying that off. Forbes reported in February 2023 that people between ages 25 and 34 on average owe between $10,000 to $40,000 in student debt! This idea seems geared toward those earning well above the median income.
Another problematic suggestion is to "literally hide your money." Saying she hides cash in a Monzo pot (a virtual piggy bank), she suggests that when your cash is "out of sight, it's out of mind," preventing you from overspending. The problem here is that this won't help you grow your savings. Money expert Tori Dunlop of popular IG page Her First 100k says the best course of action is to deposit any excess cash into a high-yield savings account or invest it because cash collecting dust in no-interest pots (virtual or real!) won't accumulate interest. Hiding cash isn't the worst idea for small amounts of mad money or pocket change that you're going to spend soon, but don't do this for large wads.