Everyone is different in how they spend money. Like investing, each individual’s goals and priorities will differ when it comes to spending.
Some of us will prioritise spending on certain items or experiences while others will place a higher priority on being frugal and saving more for retirement.
Along the spending spectrum, there are two types of spending “personalities” that are very different; loud budgeting and quiet luxury. But what exactly are these two types of spending habits and what are the key differences between them?
Loud Budgeting: Transparency About Spending
While loud budgeting might initially sound like a souped-up version of the FIRE (Financial Independence, Retire Early) movement, it’s actually focused more on being honest with both yourself and those around you with your cash flows and financial goals. The name has its roots in the realm of TikTok, with the term going viral at the beginning of 2024.
So what does loud budgeting entail? It involves being in tune emotionally with why you’re making certain spending decisions and, more crucially, understanding the trade-offs you’re making when you part way with your money. Furthermore, you should be setting a budget and “manifesting” your financial goals through your actions.
As a loud budgeter, that could mean turning down activities or experiences with friends or family that don’t fit into your budget. Importantly, though, you’re speaking up and explaining your reasoning for declining these invitations.
By being empowered to speak about money-related decisions, loud budgeters have the ability to practice budgeting in real-life settings (outside of just trying to stick to a spreadsheet).
Quiet Luxury: Understated Consumption
So what about quiet luxury? Put it this way: wearing a t-shirt with a massive Dolce & Gabana (D&G) logo emblazoned all over it is the opposite of “quiet luxury”. What quiet luxury embodies is a lifestyle that focuses on understated (but quality) luxury and inconspicuous consumption.
As a lifestyle trend, it can trace its roots back to the post-Global Financial Crisis (post-GFC) era that came after 2008. That was when conspicuous consumption was frowned upon by most people given the levels of outrageous spending that went on during the boom years from 2001 to 2006.
As a result, more individuals – who were affluent – were deciding to shift away from flashy logos and loud patterns towards timeless but simple luxury designs. In a way, it could be defined as “luxury minimalism”.
The trend has come to the fore again in the past couple of years on the back of pop culture references, such as the hit HBO show Succession. Many of the protagonists’ (a billionaire family) outfits in that show come from classic, timeless luxury brands like Brunello Cucinelli and Loro Piana – which are said to embody the quiet luxury aesthetic.
That also came within a period when stocks in the US lost nearly 50% of their value (2008-2009). More recently, the price of gold also responded positively to the global emergency of the Covid-19 pandemic and continued to rise as it became clear that global inflation was heading higher in the years after.
Key Differences Between Loud Budgeting And Quiet Luxury
Clearly, there are some large differences between the two. First off, there’s the cost factor. Whereas loud budgeting involves being extremely vocal and transparent about your budgeting goals being a constraining factor of your social opportunities, quiet luxury is less about being “loud”. Indeed, cost isn’t a factor at all with quiet luxury as simple t-shirts from brands like Loro Piana can cost upwards of S$1,500 per piece.
Second, there’s the transparency and honesty aspect of loud budgeting. With that approach, loud budgeters are encouraged to converse openly about why they’re not attending a social event and the financially-driven reasons behind that decision.
In contrast, quiet luxury is all about understated luxury consumption in that whoever is trying to exude quiet luxury isn’t trying to tell people around them how much they spent on this pair of shoes or that jacket. It’s a look that should be recognisable without anyone having to say anything about it.
Overall, loud budgeting and quiet luxury are certainly two different spending habits but they also appeal in their own unique ways to those who practice them.
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