A new trend on the social network TikTok is “noisy budgeting”: young people encourage each other to create a budget and then openly share their financial plans with others, their friends and followers. Agency Bloomberg He called this innovation the latest trend in the world of personal finance and “essentially Gen Z’s approach to financial reporting.”
For example, for Natalie Fisher, a 25-year-old content creator from the Greater Seattle area. (urban conglomerate in Washington state)2024 is the time to cut costs as much as possible. At the beginning of the year, she FaceTimed her friends, everyone shared their financial goals and how they were going to achieve them, and then announced “no spending in January.” Fischer and her husband, who spent nearly $20,000 on their wedding last year, also canceled their $208-a-month gym memberships, and Fischer refused to use any parlors or nail salons. The concept of “high budgeting” emerged at a time when ordinary middle-class people “really needed it,” Fisher said.
Is this OK for Russians?
Olga Milova, head of the financial literacy department of the Main Directorate of the Central Federal District of the Central Bank, noted in an interview with socialbites.ca that the tendency to “high budgeting” makes it possible to show others by example how to deal with the budget. specific financial issues, avoiding mistakes and what methods are acceptable in this or that situation.
By “bragging” success in this direction, the person himself has an incentive to continue not to deviate from the intended path in order to properly achieve his financial goal. This prevents him from “falling flat” and enables him to emerge victorious from the struggle for financial solvency.
For someone, a promise to their friends or subscribers to start budgeting will force them to keep their word. It’s like doing sports; For some, it is easier to practice in a group so as not to run away, but for others, they do not miss a single workout because they have willpower,” explained the expert.
Master of Laws, Associate Professor at the Department of State and Municipal Finance at the Russian University of Economics. GV Plekhanova Mary Valishvili stated that the idea of ”high budgeting” arose as a response to the previous TikTok trend – “loud demonstration of luxury.”
“TikTok trends are more interesting for zoomers (Generation Z) and bloggers who advertise everything new. This culture of complete openness is characteristic of Europeans and Americans, not Russians,” he added.
According to him, history and modern cases have taught every Russian that all money problems should be resolved within the family, and one’s well-being should not be shown or discussed with anyone.
“Russians will, of course, improve their skills in managing the family budget, but they will do it” quietly, said Valishvili.
BCS World of Investments investment strategist Alexander Bakhtin admitted that in Russia it is not very common to talk openly, publicly and shamelessly about your financial situation (expenditures, available budget).
Mikhail Sergeichik, head of the NIFI project “Moifinansy.rf” of the Ministry of Finance of the Russian Federation, called on Russians to understand that in the modern world the topic of personal budgeting is not a taboo and it is important not only to discuss it. For financial problems with your family as well as consultation with friends:
“Talk not only about what and how much it costs, but also about the distribution of income and control over expenses, property and savings. “This is a useful practice: rationally optimizing spending, striving to increase income, and combining efforts to motivate you to achieve financial goals faster and more efficiently.”
According to the expert, Often the success of others encourages a person to contribute to his own success: If he can do it, so can I..
“Such “noisy budgeting” challenges can become an incentive for many people to engage in financial planning and stick to the chosen financial strategy,” Sergeichik added.
However, in order not to become a victim of all kinds of scammers, “sellers of success” or simply incompetent people, you need to approach your choice of role model wisely and critically evaluate any suggestions. At the same time, even if a professional shares his recommendations, his experience may not be useful to everyone, but only to some narrow social groups.
“Advice from an experienced Wall Street trader to an unskilled investor, for example, will only confuse at best and may even cause harm,” Sergeichik emphasized.
According to him, danger awaits those who decide to disclose their financial decisions to the public:
“Detailed personal information on social networks attracts the attention of fraudsters. That’s why you always need to accurately assess your target audience, treat your personal, financial and other personal data responsibly and comply with basic security and digital hygiene rules.”
Instagram user Lyubov (the owner of the company Meta is known as an extremist and is banned in Russia) told socialbites.ca that “high budgeting” will not help her and there is no point in telling everyone about her plans to reduce expenses. ways to make money.
How to save correctly
According to NAFI research, From 2020 to 2023, the number of Russians managing the personal budget in one way or another increased from 50% to 65%. The share of Russians aiming to minimize non-essential spending increased from 16.2% to 20.4% in 2023, according to Moneyman.
“At the same time, when Russians say budgeting, they often mean an approximate accounting of income and expenses. This is the wrong approach. Failure to take into account the little things, unplanned expenses, lack of long-term planning can reduce all financial planning efforts to zero,” said Sergeychik.
Valishvili mentioned four basic rules that will help reduce costs:
- Analyze your structure to reduce your expenses. Today, banking applications collect information about spending transactions on the card and provide infographics, after reviewing which you can find the “gap” in the budget.
- If you must purchase expensive goods or services, make long-term plans and set strategic goals.
- While shopping, look for additional opportunities to get “cashback” from banks, stores and the government. The latter implies the possibility of receiving a tax deduction if a citizen has an official income and pays personal income tax (13%).
- It is better to examine your assets for maintenance costs. For example, if you have a car but need it a few times a month, it will be cheaper to use taxi or car sharing services, and the costs of maintenance, insurance, fuel and taxes can negatively affect your budget.