Are you ‘budgeting hard’ or ‘spending destruction’?  Finance according to gen Z

Are you ‘budgeting hard’ or ‘spending destruction’? Finance according to gen Z

If there’s one subject that the US education system does more than sex ed, it’s financial literacy. I never learned about insurance, credit card debt or what a 401(k) was. The only lecture I remember about money was from a gym teacher who, while going through a divorce and midlife crisis, thought it would be wise to show a group of eighth graders how to float a check. A useful skill, perhaps, except that no one uses checks yet.

Unless you have an accountant parent – or a trust fund – you can learn about investments, budgeting and taxes from strangers online. A Forbes Advisor survey conducted last year found that 79% of Americans between the ages of 18 and 41 hit social media for financial advice. This is a booming business on TikTok, where professionals give personal finance lessons. (In a hOPE these content creators are professionals; (some are former finance majors and self-help authors, while others simply sell themselves as guides.)

Gen Z is reshaping the historically dry topic of money management with cute viral terms, reclaiming the world of financial literacy from overbearing corporate types. You’ve probably heard a few: “hard budgeting”, “soft spending”, “cash flow”. There is a lot of anxiety wrapped around them; any concept called “money dysmorphia” or “spending destruction” is bad, after all.

It makes sense that a generation obsessed with wealth (or their lack thereof) would want to put labels on their collective financial woes. A survey found that nearly a quarter of 18- to 24-year-olds believe they will never retire. They came of age during a cost-of-living crisis and depressed housing market. So why not have fun when describing a lack of savings or student loan debt?

The new language of money

TikTok comedian Lukas Battle coined the term “hard budgeting” as a “new trend” for 2024, advising viewers to cancel plans or put off big purchases they don’t want to make. can afford – and are not ashamed of their frugality. “It’s not, ‘I don’t have enough,’ it’s ‘I don’t want to spend,'” Battle said in a TikTok, adding: “If you know anybody who’s rich, you know they don’t want to spending. So it’s almost more chic, more stylish, more flexible.

It was half advice, half joke – but commenters ran with the idea. “Quiet luxury is gone and tight budgeting is in,” wrote one. In the words of another, “This is the essence of recession.”

Battle’s video has been viewed 1.5m times, and the term has landed in headlines from CNBC, Fortune, and the New York Post. “Strength budgeting is a financial strategy where you share your money desires directly and not quietly with the people in your life,” financial advisor Derek Ober told HuffPost. That’s a lot of words to say “don’t spend more than you earn”.

I prefer “destruction spending” to “tight budgeting”, because it feels baroque and leads to the net goal that I can buy more things. The girls have been calling it “shops” for years: if things go wrong and no therapist will take your insurance, the only remedy for your great sorrow is to buy new shoes, or $75 candle, or a Goop-approved, sculptural vibrator.

All signs point to “spending destruction” which is a careless and unwise decision, but it feels fun to comfort oneself through unnecessary purchases. And this is a problem for many Americans. Despite inflation and high interest rates, the National Retail Federation reports that holiday shopping reached record highs last year, at a cool $964.4bn.

Perhaps a better compromise lies in “soft savings”, an offshoot of the beloved “soft life” of gen Z, which favors a gentle, easy existence over the hustle. and grind.

Adherents of “soft savings” preach using finances to support one’s quality of life – travel, for example, or expenses related to a hobby or goal. Saving is good, but a good life is better than money in the bank. All well and good, but this is the kind of airy behavior I expect to hear from someone at a party who says they grew up “comfortable”, not “high class”.

Related: Forty-four of the 50 US states are exacerbating inequality with ‘reverse’ taxes

“Cash stuffing”, which I believe grandmothers have been around for a long time, is a new name for the age-old practice of putting money in marked envelopes for various things – rent, food , clothing, entertainment – and just spending a lot. every month because you can afford to put it in an envelope. Using cash helps, some argue, because the physical object feels more tangible than money sitting in a bank account. (Another example of gen Z believing it was invented by an old concept.)

I’m not sure what to make of “money dysmorphia”, a take on the real body dysmorphia, a mental health condition where people have a distorted and negative image of their appearance. It’s not good to attribute that to a rich person’s inability to realize that they are actually rich (or vice-versa), but that’s what “money dysmorphia” means.

According to Business Insider, half of people making more than six figures reported in a survey that they were living paycheck to paycheck, despite living on more than the national median income. Another report from Bloomberg found that a quarter of survey respondents who earned at least $175,000 a year described themselves as “very poor”, “poor” or “getting by but things are tight “. This can be categorized as money dysmorphia, and although it may stretch the limits of empathy, it points to a darker reality: when things are not going well for the privileged, what chance does the with us?

Learning this new financial vocabulary probably won’t get me into a higher tax bracket. Smarter advice, like tight budgeting and cash stuffing, seems like second nature. Perhaps the best thing that can be taught in these terms is that Americans desperately need mandated financial literacy classes — and not from TikTok.

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