What Makes Gen Z Soft-Saving Over Saving for Retirement?

Saving money for generation Z is seemingly different from the traditional way. It is supposed to be beneficial for the future, but apparently, this is not the case with this new generation. According to Intuit’s report, retirement is less likely to be a need for them. They may not look to retire early and may not plan to retire. It might sound worrying, but Generation Z is known for their integrity and willingness to not abide by unhealthy lifestyles. So, what is the reason behind this approach?

What is ‘soft-saving’?

Soft savings does not necessarily mean money but also experiences for generation Z. It refers to living more in the moment rather than saving too much for the future. Generation Z puts more importance on experiences and according to Intuit’s report, soft-saving is the soft life’s answer to finances.

What are their reasons?

Young Americans are the ones who started the trend, a response to F.I.R.E. (Financial Independence, Retire Early) hustle culture and the girl boss era, according to the report. According to it, there are only two reasons for their approach to soft-saving, which are personal growth and their well-being.

This means the generation is opposed to a lifestyle that they see as toxic and does no good for themselves. They are against the idea that people should save as much money as possible by cutting down on spending and also against the hustle culture, where people work hard without many breaks. Another additional reason for this action is their feeling of lagging behind their peers that they see on social media. Among 10 people, 7 of them feel so.

How is it beneficial for them in the future?

Soft saving means there will be less money in the future. Hence, what about retirement? The soft living trend focuses heavily on life experiences and personal growth. Hence, the benefit is financial flexibility. Soft saving typically involves keeping a portion of one’s savings in liquid assets, such as cash or easily accessible savings accounts, rather than tying up all funds in long-term investments like retirement accounts.

This liquidity ensures that Gen Z has readily available funds to cover unexpected expenses, emergencies, or short-term goals without incurring penalties or fees for early withdrawal. While soft saving may place less emphasis on traditional retirement savings, it provides Gen Z with the freedom to live authentically and pursue their passions while still maintaining financial responsibility and stability.

Who is it suitable for?

While FIRE is suitable for people who want to escape from corporate life and prioritize financial stability, Gen Z’s soft saving culture is suitable for those who want a healthy lifestyle. This saving culture could also suit individuals who seek a work-life balance approach due to the pressures of traditional corporate life.

How should one do it?

If you want to save like Gen Z, here are some ways to do it:

Prioritize experiences over material possessions: Spend on experiences, like fun activities, instead of buying lots of stuff.

Set boundaries: Make sure to take care of yourself by setting aside time for relaxing activities like skincare routines, exercise, or enjoying hobbies.

Budget intentionally: Keep track of your money by making a plan for how much you spend and save each month to reach financial goals.

Build an emergency fund: Save a portion of your income each month to build an emergency fund covering three to six months’ worth of expenses.

Invest in personal growth: Invest in things that help you grow, like learning new skills or hobbies.

Find your financial balance: Find a balance between saving money and enjoying life, so you don’t feel stressed about finances.

Avoid extremes: While soft saving encourages a more relaxed approach to finances, it’s essential to maintain balance and avoid extremes.

Save for short-term goals: Save for short-term goals, like buying something you want or need.

Consider investing: Think about investing your money for the future, even if retirement isn’t your main goal right now.

Enjoy the present: Embrace the philosophy of living in the moment and enjoying life’s simple pleasures. Soft saving encourages a balanced approach to life, prioritizing happiness and well-being alongside financial security.

Is soft-saving an excuse to not talk about finance?

Based on the report, the majority of Americans are more comfortable talking about other things than money, debts, salary, savings or investments. Despite the uncomfy feelings, they also wish others were more open to talking about it.

While soft-saving may seem like an excuse to avoid discussing finances, it aligns with Generation Z’s values of personal growth and well-being. They reject toxic lifestyles and are more comfortable prioritizing their happiness over strict financial planning.

However, soft saving raises questions about financial security in the future, particularly regarding retirement savings. It may not be suitable for everyone, especially those who prioritize financial stability and long-term planning. Overall, while sof- saving may have its benefits in promoting a healthier approach to life, it’s essential to consider its implications for long-term financial security and to find a balance between enjoying the present and preparing for the future.

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