Do you know Olivia? Perhaps she reminds you of someone you know.
Olivia always known that saving for her first home would require a bucket-load of discipline and sacrifice. And when she thought about the amount needed for a deposit…well, it all seemed too hard.
Whether it was a weekend away with friends, or the latest can’t-live-without gadget, Olivia was too easily distracted and couldn’t seem to control her spending.
The problem, she believed, was that long-term savings goals felt so unattainable that she saw no reason to go without the things she wanted – now.
In short, Olivia lacked motivation.
Olivia often expressed with her friends how frustrated she was by a seemingly unreachable sum required to buy a home, and her seeming inability to save. That’s when her friend Emma told her about loud budgeting. Loud budgeting, explained Emma, is a goal-oriented mindset, in which you make your frugal mindset obvious. It begins by saying, out loud, that healthy management of your money is something you value more than mindless consumption and the curated, unrealistic lifestyles portrayed in social media1. It starts with being willing to share your savings goals with trusted friends and family and being accountable to them.
For Olivia, it was like a light came on. This was the opposite of how Olivia’s parents managed their money; for them, discussing one’s finances was strictly taboo. But with the transparency of loud budgeting is its driver, this would definitely help when politely declining invitations to dinner or the movies, etc.
So, after talking it through with Emma, Olivia decided to try loud budgeting. They discussed how much Olivia would need for a home deposit and Emma guided Olivia through these simple steps:
- Review income and expenses and draft a realistic budget.
- Set a savings target, broken into smaller, manageable milestones.
- Create a large colourful chart to plot progress and keep it in a prominent place.
- Utilise technology; many banks offer savings tracker apps. Additionally, the government has a range of savings and budget calculators at gov.au.
- Invite feedback and provide updates to the people around you – take them on the journey with you, their support is invaluable.
- Stay focussed by visualising yourself achieving your goal, for example, unpacking boxes in your newly purchased home.
Loud budgeting became part of Olivia’s weekly routine. Each movement of her tracker pin along my chart was incredibly satisfying, and there was the sense of empowerment with every milestone achieved.
Olivia learned that loud budgeting is more than just a savings concept. Loud budgeting is all about being every bit as vocal and transparent about what you are doing to spend less and meet your money saving goals2. It’s even more than being accountable.
It was about sharing your dreams with loved ones. It was about celebrating each milestone with them.
So while loud budgeting may not work for everyone, it definitely worked for Olivia .
Perhaps it could work for you too.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
1 https://money.com/what-is-loud-budgeting/
2 https://lifehacker.com/money/what-is-loud-budgeting-and-how-to-do-it
