With rising inflation, increased housing costs, and general panic around a looming recession, the idea of buying less, spending less, and saving more has struck a chord with the TikTok influencers. And it has a name: "underconsumption core." Here's what to know about the latest online financial buzzword, and whether or not it has any merit in your money mindset.
Take online advice with a grain of salt
Like with "loud budgeting" or "spaving," underconsumption core is yet another trendy term for something that's existed forever: Being frugal. But there seem to be some merits to this trend, like maximizing what you already own and generally living a more minimalist life. For instance, in one underconsumption core video with 4.4 million views, TikToker @sophie_hinn shows how she makes her own dry shampoo from scratch, thrifts her furniture, and chops up old towels to use as cleaning rags. Very few of us will likely make our own shampoo, but still, consuming less is generally good practice.
"While there may be valuable takeaways in each new trend, such as the buying less and saving more ethos that underconsumption core preaches," says Julie Guntrip, Head of Financial Wellness at Jenius Bank, "personal finance tips on social media should be seen more as input or inspiration, rather than advice." “Advice” can only truly occur when someone knows you and your financial situation personally.
And if we just look at “underconsumption core” on its own merits, the trend isn't total snake oil. This truly is a relief, considering how much of TikTok is a never-ending stream of bad financial advice. Guntrip notes how "the concept appears to endorse a mindful, and potentially more responsible, approach to spending which could be helpful for people who want to change spending habits." Guntrip gives some more examples: The idea of buying quality goods that last as opposed to disposable products, or even the practice of “staying in your own lane,” (instead of trying to keep up with friends, or even social media, with consumption).
However, Guntrip draws a distinction between financial trends and financial wellness: "To improve overall financial wellness, an individual would want to look at many areas of their finances to include all essential and non-essential expenses, debt, short- and long-term savings, and more." Adhering to a trend, even a logical and beneficial one, doesn't mean someone is fully addressing their financial health. So while “underconsumption core” does address something like spending habits, true financial wellness will always be more encompassing.
How “underconsumption core” can help curb excessive spending
Any financial trend focusing on "less is more" may help curb excessive spending by encouraging consumers to re-examine their spending habits. Of course, the most obvious follow-up to this trend would be actually creating a budget that works for you. And during the budgeting process, the first place you start is by tracking your money flow: the money coming in and the money going out. From there, you may create categories for a budget, spot spending patterns, and opportunities for savings.
In this way, Guntrip explains, underconsumption core fits nicely as the outcome of a healthy budgeting practice. "Rather than being strict rules to live by," says Guntrip, "this trend could become the change in mindset and approach to spending that helps the individual reduce certain categories of spending, or free up more funds to put into savings."
Guntrip shares an extra hack in the budgeting process: You can build in funds for impulsive spending, something we call a “splurge fund.” If someone has splurge money set aside, they have the opportunity to experience the “rush” of a spontaneous purchase, but within the boundaries of a set dollar amount.
My favorite simple tip to avoid unnecessary purchases is to write down the things you want to buy before you buy them. When you read over items on this “to-buy list,” you’ll be able to make a more thoughtful decision as to what you really need. You also might find that after a few days, a few of the items on your to-buy list have lost their appeal.
How de-influence your money mindset
Impulsive or even subconscious spending is a habit that may be challenging to break, but one approach from Guntrip could be to "take a step back, look at the bigger picture, and set some savings goals." And these goals will look different from person to person. Maybe it's saving for a home, maybe it's saving for a weekend vacation. What matters is having goals could help to change the focus and help an individual be more intentional in the way they spend. With each purchase comes the question, “is this more important than my goal?”
"Having goals could also help in the de-influencing process because they may encourage someone to stay in their own lane," Guntrip says. Individual goals are individual, and therefore, following someone else’s “advice” on social media may become less relevant if the direction doesn’t contribute to the goal.
While you shouldn't use TikTok as a replacement for financial advice, this specific trend could be inspiration to reset your finances, avoid impulse purchases, and appreciate what you already have.