For Gen Zs coming to terms with money management, personal finance can be challenging. While buzz phrases like “doom spending” and “loud budgeting” have made finance interesting, not all may be helpful.
After “girl math” – using fuzzy accounting to justify indulgent purchases – went viral last year, many novel financial terms have been making their rounds on the Internet.
Usually coined by self-proclaimed Gen Z “finfluencers” (financial influencers) on TikTok, they live on #FinTok, the app’s personal finance enclave which has garnered 4.5 billion views.
These Gen Z finance terms and their accompanying advice sound good – at the very least, they make personal finance more accessible. But are they sound?
Here’s the lowdown on five popular Gen Z finance terms:
Loud budgeting encourages people to be upfront about their finances and make no apologies for sticking to their budget. It involves, for instance, explaining why you have to decline an expensive social invitation instead of making up excuses to skip the event or overspending to keep up with the Joneses. Being loud and proud about saving can help keep you accountable for your budgeting.
While treating yourself once in a while is fine, spending within your means is even more important, and loud budgeting can help you make your priorities clear.
2. Soft savings
This term is a reflection of the YOLO (you only live once) mindset, and prioritises enjoying the present over saving for the future. Those who embrace the idea of soft savings would rather set aside money for experiences such as travelling or concerts than pay off bills and build a retirement fund.
There is nothing wrong with spending on what you deem as important in the present, as long as you also have thought through your budget for essential things so you don’t end up in a tight position. In short, strike a balance between short-term fulfilment and long-term financial security.
3. Doom spending
An extreme form of soft savings, doom spending is spending money despite financial concerns to gain instant gratification or cope with stress. In that moment of deep desire or dread, you might be convinced that the comfort retail therapy brings far outweighs the cost of spending beyond your means.
While tempting, doom spending is an unwise way to use your money – it could drain your savings while only alleviating your stress in the short term. Instead, you could invest in activities with longer-term benefits, such as a gym membership for better health. Or if you really can’t help but doom spend, it is wise to set a limit on it.
4. Cash stuffing
Cash stuffing, though novel-sounding, is actually a new term for an age-old budgeting method – envelope budgeting. It involves setting aside cash each month for different spending categories like groceries and entertainment. The amount in each envelope determines how much you get to spend for the month.
Cash stuffing can be helpful in fixing your budget and preventing doom spending, as long as you don’t mind paying for everything in cash – but this also means forgoing the convenience and perks (think rebates and rewards) of credit cards, and interest you might earn from a savings account.
5. Girl math
Probably the most viral of the five terms, girl math applies when someone rationalises big-ticket purchases using creative mental gymnastics that don’t usually make mathematical sense.
For example, the person may argue that buying a $500 necklace on sale that originally cost $600 means they save $100; and since they intend to pass it down to their children, the necklace becomes practically free in the long run.
While humorous, girl math can turn harmful if used to rationalise unwise spending.
Scrolling through social media for financial advice can be a fun and engaging way to educate yourself. But as with anything on social media, don’t adopt the tips and trends before you verify that they are sound advice and suit your lifestyle and circumstances.
the bottom line:
While social media-fuelled finance terms may make the world of personal finance less intimidating, don’t count on them to always make sound advice.