Are these popular online finance trends actually good for your bank account?
Loud budgeting, the little treat economy: An expert weighs in on five online spending and saving hacks
Young Canadians are increasingly turning to TikTok, Reddit and other social media apps to get their personal finance information. A 2019 study from Statistics Canada found that 51 per cent of Canadians aged 18 to 34 use the internet for financial advice. In the U.S., a 2023 study found that nearly 80 per cent of millennials and Gen Z are getting financial advice from social media.
Online, and especially on #FinTok (the catch-all for the finance community on TikTok which currently houses over 111,000 posts), personal finance trends spread fast, with viral videos espousing the benefits of “girl math” and “soft saving” quickly going from trend to real life financial plan for many.
“I think these online trends are good, as it gets younger people thinking,” says Daniel Tsai, a business professor at Canada West University and a lecturer at the University of Toronto.
However, Tsai says that it’s important to be wary of online advice; sometimes it can advise risky “get-rich-quick” behaviours, like investing in meme stocks like GameStop. “Use a dose of caution and talk to experts,” he says.
Here, we break down five popular online personal finance trends that young Canadians are actually participating in to see if they’re financially sound.
The trend: Girl math
Girl math is one of the most viral TikTok money trends (the hashtag currently has almost 140,000 posts on the video app). It started off as a funny segment on a New Zealand radio show Fletch, Vaughan and Hayley, which they posted to their TikTok account, and soon became the go-to term to describe the logic of justifying any and all purchases. For example, that Olivia Rodrigo concert is essentially free because the $135 tickets were bought months in advance.
27 year-old Jennifer Nguyen uses girl math a lot — in fact, she uses it to justify her career. The lifestyle writer says that the practice of girl math helps her reframe her salary as a freelance writer, balancing her lower-than average income with the non-monetary compensation she often receives in her line of work. “A lot of my job involves sampling things, being hosted for dinner and receiving gifts,” Nguyen says. “That’s girl math: I’m making less than those around me, but I’m not paying for dinner.” For Nguyen, these non-salary perks are a part of her compensation, and allows her to see the worth of her career — beyond the money. She also uses girl math to help justify bigger purchases: Something like a high quality designer coat is worth it for the writer because she can wear it to fashion industry work events and she won’t need to re-purchase a jacket for a few years.
Expert POV: “People make leaps of logic to try to justify purchases and decisions all the time,” Tsai says. But purchases need to be looked at in the bigger picture. Tsai’s advice is to dig deep and think past the rationalization: Think about whether or not girl math is explaining away spending habits that are problematic, like overspending or being underpaid, and don’t let it cloud your judgment. But Tsai also says that life isn’t all about money; there are a lot of valid non-financial perks that people go down career paths for. It’s just important to figure out whether those non-financial perks really do work out in your favour.
The trend: Little treat economy
The idea of what is a “little treat” differs from person to person — some prefer an edible little treat like an iced coffee, cookie or croissant, while for others it might be the latest issue of their favourite magazine. But they all have the same effect — that “little treat” is an incentive for reaching small goals, like finishing an assignment or not texting your ex. The little treat isn’t a new idea; it’s good old positive reinforcement, one of the most common psychology tips used to nudge behaviour in the right direction.
For Sabrina Sisco, a 24 year-old freelance photo assistant, a little treat is integral to their work routine. They see it as an investment that they’ll get immediate returns on; a bit of money spent on something like a coffee to get the workday started, where they’ll earn what was spent back, and more.
“ It’s not a $40 meal everyday, it’s not a big treat,” they say. “It’s the smallness and sweetness of the treat that feels like a hand hold to get to your work."
Expert POV: Tsai says that there’s nothing wrong with a bit of positive reinforcement. However, he adds that the feeling of being rewarded by your little treat might fade overtime, leading to the need for more and more treats to feel rewarded, ultimately leading to an outsized little treat budget. As an alternative, Tsai recommends setting aside little treat money for a larger reward down the line, like a vacation. It’s less instant gratification, but a better pay off down the line.
The trend: Loud budgeting
This popular trend encourages people to be open and honest about their finances. Rather than keeping money worries from friends and family, and driving yourself into debt by spending money you don’t have to keep up appearances, loud budgeting means saying “no” and being transparent about what your budget is and exactly what you can — and cannot — afford.
Sylvia Marie is a PhD student and says that her stipend from school doesn’t cover the cost of living in her city, so loud budgeting is a necessity. “I’m very intentional with my spending and a lot of that involves communicating to other people what my budget is,” she explains. For example, she doesn’t order takeout ever, instead preferring to cook at home and use the money she’s saved from delivery fees for nights out with friends. She’s upfront about her budget with friends and colleagues (most of whom are in similar financial boats, so are supportive). Though it sometimes means missing out on a big trip, it also means she’s finishing her PhD without being reliant on bank loans.
Expert POV: Tsai says that loud budgeting might help explain your budget and create firm boundaries around spending, but it’s important to not get trapped in a negative money mindset. “Instead of thinking about what you can’t do, think about things you can do despite your budget,” he says. In other words, focus on what you do have rather than what you don’t have to reframe negativity around missing out because you can’t afford it.
The trend: Low-buy challenges
A low-buy challenge is exactly what it sounds like: it’s a challenge to cut back on any unnecessary spending from your budget. It starts by creating rules for your spending based on personal values and lifestyle, like limiting yourself to a certain number of meals out every month.
After seeing other people on TikTok break down how much they spend monthly on each “category” (like, food, self care, entertainment, etc.), and being confronted with a big credit card bill, 31-year-old Inderpreet Gill was inspired to limit her buying. She tried a “no-buy” challenge at first, hoping to go cold turkey on unnecessary spending in general, but found it too restrictive and unrealistic. Now, she sets purchase limits for herself in each category, which she says “gives [herself] a little bit more grace, so you don’t feel like you’ve totally failed if you make one purchase.”
“I look at how much I spent in that category over the last few months and cut it down drastically,” she explains. For example, Gill says she was ordering UberEats multiple times a week, at over $30 per order. Now, she limits herself to one order a week. For shopping, Gill says she’ll cut herself off until certain dates: like, no shopping until Black Friday. Though Gill had previously relied on girl math to justify purchases (she loves a sale), doing the low-buy challenge has helped her realize that buying things on sale “is still giving money away.”
Expert POV: Tsai says that participating in a low-buy challenge can be a great way to recalibrate your spending. But, if it’s temporary, the positive changes are likely to disappear when the challenge ends. Tsai recommends using the challenge to take a deeper look at your spending habits to set long-term goals for both cutting down purchases and saving, leading to more sustainable money habits long term.
The trend: Soft saving
Many young Canadians aren’t saving up for traditional financial goals, like buying a house or retirement. A 2019 KPMG poll found that while 72 per cent of millennials want to own a home eventually, 46 per cent say that home ownership is a pipedream. And forget retiring at 65 — 74 per cent of Canadians between the ages of 24 and 44 think that it’s an outdated concept to completely stop working by age 65 thanks to the soaring cost of living. So, many turn to soft saving, an approach to budgeting that focuses on enjoying the present, not stressing about the future and saving up for more short-term goals like a vacation.
“Retirement is purely conceptual — who knows what the world will be like then?” says 27-year-old Isaac Fox. “I’d rather have some good experiences now.” For Fox, soft saving means less stress around an uncertain future and more invested into cultivating the lifestyle he wants now. That means spending on clothes he likes, furnishing his apartment and hosting dinner parties for his friends. Though Fox is in the process of saving for some long-term goals (his goal right now is to build up an emergency fund), he doesn’t fixate on something as far-off as retirement. “I’m investing in short-term experiences that have meaning that I’ll carry with me for a long time.”
Expert POV: There’s nothing wrong with soft saving, Tsai says. But it is a sobering reflection of the younger generations’ fears. “There’s a real crisis among younger people who are realizing that they’ll never achieve the things they thought they’d achieve. It’s not a fear of missing out, it’s a fear of never having,” he says. That being said, Tsai says that it’s important to think about the future, because as far-off as it seems, it is inevitable. That means asking questions like: How will you take care of your future family, if you choose to have one? Do you want to rent for life? “Be realistic about what your real, life-long goals are,” he says.