“Loud Budgeting” is Really Just an “Expense Needs Analysis”

If you follow social media, you’ve likely seen a new trend called “loud budgeting” that’s getting a lot of attention from influencers. The idea behind loud budgeting is to be open about your financial goals and how you’re spending money so others can help keep you accountable. But what many don’t realize is that loud budgeting is already a standard part of financial planning known as an “expense needs analysis.” That’s where a household tracks all its income and expenses to see what’s necessary and what’s not.

Most households don’t do this enough, so we encourage you to give it a try. It’s simple, and here’s how it works in four steps:

1 – Track Cash Flow

First, figure out how much money your household brings in. Count all your sources of income, like your job and any passive earnings, over a set period, like a year. Then, before you dive into expenses, ask yourself if you’re making more than you’re spending (good) or if you’re going into debt or just getting by (not so good). If you’re in the red, it’s time to rethink your spending. If you’re in the black, congrats—you’re on the path to financial freedom!

2 – Review Expenses

Like with your income, keep tabs on where your money goes. How much do you spend on housing, utilities, food, and everything else? Don’t forget the small stuff, like clothes and household items. Look at your spending over more than just a month, as spending tends to fluctuate in certain seasons or around holidays.

3 – Categorize/Evaluate Expenses

Now, group your expenses into four categories: fixed-necessary, fixed-discretionary, variable-necessary, and variable-nonessential. Fixed-necessary items are must-haves, like housing and utilities. Fixed-discretionary things, like cable TV subscriptions, are nice but not crucial. Variable-necessary expenses, like gas and travel, fluctuate but are still necessary. And variable-nonessential costs, like dining out, aren’t essential at all. They’re the easiest to cut when you need to tighten your budget.

4 – Challenge Yourself and Your Expenses

Finally, take a step back and ask yourself what truly makes you happy, how often you use certain things, and if there are cheaper alternatives. For example, you may love playing basketball at an expensive gym but find just as much joy playing for free at a local school. Food and clothing are necessary, but how much do you really need? And should some of that money go toward bigger goals, like an emergency fund or retirement savings?

At Savant, we’re not trying to be the loudest voice online. But we do believe in the power of a solid budget as part of a smart financial plan. Don’t wait to take control of your finances. Reach out to us anytime for help.