If you follow personal finance trends on platforms like TikTok, you may be familiar with the concept of “loud budgeting,” – a tongue-in-cheek response to another social media trend, “quiet luxury.” What is loud budgeting and is it a concept that’s worth adapting to grow your business?
In this article, you’ll learn more about this money-management concept and ideas about how to adapt its tactics to your business.
What is loud budgeting?
Over the last few years, the concept of “quiet luxury” went viral on social media and took over in every area from household furnishings to handbags. The idea was that after years of bold declarations of newly minted wealth such as cryptocurrencies and NFTs, the world was ready for the “old money” preferences of cashmere, leather and gold, along with old-fashioned stocks and bonds.
Fast forward a couple of years and now we may find ourselves in an era of “loud budgeting” – a time when instead of feeling pressured to purchase, you announce that you’re going to avoid into debt just for appearances and decide to chill for a while.
Loud budgeting emphasizes being open and vocal about financial planning and decision-making. Unlike traditional budgeting, which is often private and individualistic, loud budgeting encourages sharing financial goals, constraints, and achievements publicly. It’s become a battle-cry of sorts for those who are simply tired of following the trends and accruing debt.
Suddenly, it’s become chic to lay low and live within your means, especially in the face of rising rents and mortgage costs along with the impacts of inflation and post-pandemic fee increases.
Loud budgeting and small business
The core principles of loud budgeting include setting clear and realistic financial goals, maintaining transparency about financial decisions, and fostering open communication about money matters. Could this philosophy be applied to your small business, too? The answer is yes.
One of the key concepts in loud budgeting is transparency. This same idea of transparency can be applied to your small business by helping your team better manage finances, making informed decisions, and meeting your collective goals.
Here are other ways that you can use the principles of loud budgeting in your business:
- Enhanced financial literacy: By sharing financial information and goals openly, your employees will gain a better understanding of your finances and can make informed decisions aligned with your business’s financial health. A financially literate team is more likely to contribute effectively to your business’s financial goals. You can achieve this by providing training and resources to improve employees’ understanding of financial concepts, such as workshops, seminars, and access to online courses.
- Example: When employees understand how reducing excessive expenses can improve the bottom line, they’re more likely to adopt cost-saving practices.
- Example: When employees understand how reducing excessive expenses can improve the bottom line, they’re more likely to adopt cost-saving practices.
- Collaborative financial planning: A collective approach encourages innovative solutions and enhances problem-solving capabilities. By involving employees in goal setting, you foster a sense of collective responsibility and motivation. You can set clear financial goals for the business and share these with your team. This could include revenue targets, cost-saving initiatives, or investment plans.
- Example: During a financial planning meeting, an employee might feel empowered to suggest a cost-effective supplier, leading to significant savings.
- Example: During a financial planning meeting, an employee might feel empowered to suggest a cost-effective supplier, leading to significant savings.
- Building trust and accountability: When employees are aware of your business’s financial situation, they’ll feel more accountable for their actions and contributions. By keeping your team informed about financial performance through regular reviews and updates, you can build this trust. Some examples might be scheduling monthly financial review meetings to discuss progress, challenges, and adjustments and provide detailed quarterly financial reports with insights into performance and areas for improvement.
- Example: If employees know that your business is facing financial challenges, they may speak up on financial matters or look for solutions.
- Example: If employees know that your business is facing financial challenges, they may speak up on financial matters or look for solutions.
- Celebrate achievements to empower and motivate your team: Empowered employees are more likely to take initiative and contribute to financial goals and achievements. By celebrating your business’s achievements with your employees, you can empower them and enhance their motivation.
- Example: Celebrating a financial milestone, like meeting a quarterly sales target, can boost morale and motivate employees to maintain their performance.
- Example: Celebrating a financial milestone, like meeting a quarterly sales target, can boost morale and motivate employees to maintain their performance.
- Strengthening company culture: A culture of transparency and open communication about finances fosters a strong, cohesive team environment and promotes a culture of honesty, mutual respect, and shared responsibility. You should encourage your employees to take responsibility for financial outcomes. You can do this by promoting accountability or assigning specific financial responsibilities to team members, such as budget management for their departments or cost-saving initiatives.
- Example: Regular financial updates and open discussions during team meetings reinforce a culture of inclusivity and collective effort.
- Example: Regular financial updates and open discussions during team meetings reinforce a culture of inclusivity and collective effort.
- Increased employee engagement: When employees are involved in financial planning and are aware of financial goals, their engagement levels increase. This can lead to better performance, lower turnover rates, and increased job satisfaction. You can fulfill this by recognizing and celebrating when employees meet financial goals or milestones. You can also show employees the connection between their individual roles and your business’s financial health by using performance metrics that are linked to financial outcomes like sales figures, cost savings, or efficiency improvements.
- Example: Involving employees in setting budget targets for their departments makes them feel valued and more connected to your business’s success. If your business meets its quarterly sales target, celebrate with a team lunch or a small bonus.
Is loud budgeting the same as open-book management?
In a business setting, loud budgeting shares many of the same principles as open-book management. This is when a business’s financials are shared with employees so that everyone has a better understanding of where a business stands and how each person’s role contributes to bottom-line success. Where it differs is that loud budgeting is more focused on letting others know what will and won’t be done, based on the business’s budget.
For example, with open-book management, you’d share your business’s balance sheet with your team and educate them about how and why their sales numbers will drive success.
With loud budgeting, you would let your team know that we have $X to spend to achieve our goals, and then you can brainstorm together about how to achieve those. It also makes it easier for your team to understand why you aren’t taking certain actions at this time.
Potential challenges and concerns of loud budgeting
While the benefits of loud budgeting are significant, you might face challenges when implementing this approach in your business.
One common concern is employee resistance. Not all employees may feel comfortable with increased transparency, especially if they’re not used to discussing financial matters openly. To address this, you should foster a supportive environment where employees feel safe and valued. Regular team meetings and open forums can ease this transition by gradually building a culture of trust and openness.
Another challenge is maintaining the right balance between transparency and oversharing. While it’s important to be open about financial goals and achievements, some financial information may be too sensitive to share broadly. You should carefully consider which information is appropriate to disclose and ensure that it is communicated in a way that is constructive and informative.
Pursuit has financing and business resources to support you
At Pursuit, it’s our mission to provide small businesses with affordable business loans and business resources that support your success at every step.
We have a wide variety of loan options and a line of credit for businesses throughout Connecticut, New Jersey, New York, Pennsylvania, Illinois, and Nevada – if your business is located in our service area, contact us to learn more!
