In the world of personal finance and saving for the future, there’s always a new trend that is said to be making waves. The latest one is called “soft saving” – I just heard about it.

In “soft saving,” the traditional wisdom of working hard, saving diligently, and retiring early is being challenged by a generation that values experiences and personal growth over accumulating wealth. Gen Z, born after 1997, is said to be at the forefront of this soft saving movement, as described in the Prosperity Index Study by Intuit.

Soft saving, in essence, means putting less money into the future and using more of it for the present. Younger investors are prioritizing causes that resonate with their values and seek emotional connections with the brands and professionals they engage with.

This shift in mindset is reflected in their preference for a comfortable, low-stress lifestyle that emphasizes mental wellness and personal growth. They are spending more on today – prioritizing luxury goods & travel. This stands in contrast to the traditional “hustle” to save every penny.

It’s important to note that although the younger generation is saving less, they are not necessarily living paycheck to paycheck. They are still saving, but at a lower rate than might otherwise be expected. Many of them also say they are more willing to work part-time when retirement comes.

I think all of us are looking for the financial balance that allows for enjoying life in the present while still planning for a secure financial future. In that sense, Gen Z isn’t new. Still if they enjoy life too much in the present, they are going to have a difficult reckoning down the road.

In the time-honored equation of investments: “P x R x T = Returns”, the “T” (Time) is the one huge advantage that young people have. It is incredibly difficult to catch up from a poor start. I’d recommend being a “hard saver” early, and seeing what life brings you before you develop too much of a taste for luxury & travel.

The again, I’m just an old Gen Xer. What would I possibly know about life? How would you respond to the idea of “soft saving” to a young person?

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