A growing number of young adults are questioning how they manage their money. Instead of chasing early retirement or aggressive savings targets, many in Gen Z are prioritising experiences, mental well-being and personal happiness in the present - a shift that is redefining traditional financial planning and raising concerns among experts.
What is the ‘soft savings’ trend?
When it comes to money, Gen Z appears to be rewriting the rules. Unlike older generations that focused on strict saving habits and early retirement goals, today’s young adults are embracing a more relaxed approach known as “soft savings.”
A recent Prosperity Index study by Intuit found that Americans aged 18 to 25 are less focused on building large savings for the future. Instead, they prefer spending on experiences that promote mental well-being, self-discovery and personal growth in the present.
Also Read | Microsoft calls mass layoff reports baseless, reaffirms business plans
Soft saving is often seen as Gen Z’s alternative to FIRE -short for Financial Independence, Retire Early. While FIRE promotes intense saving and retiring young, soft savers show little interest in early retirement and, in some cases, may not be planning for retirement at all.
“Our data shows that the latest generation to dive into the world of personal finance is not looking to retire early and may not be planning to retire at all,” the study noted. It added that while Gen Z is interested in learning about saving and investing, the approach is far less rigid than in previous decades.
Why Gen Z is choosing a softer approach
The study suggests that Gen Z is not disconnected from saving or investing. Many young adults want financial awareness, but also value flexibility. Their goal is to balance earning, spending and saving without sacrificing life experiences.
Travel, extended breaks, hobbies and activities that support mental health often take priority over building large emergency or retirement funds.
Why financial experts are concerned
Financial advisors, however, warn that soft savings could leave young adults exposed during emergencies.
“Most financial experts recommend having at least three to six months’ worth of expenses set aside,” Kara Duckworth, managing director of client experience at Mercer Advisors, told CNBC. She noted that many Gen Z clients prefer spending on long trips instead of strengthening their savings buffer. “As a wealth advisor, my radar goes up,” she said.
Also Read | From code to curry: Techie Surajit Naskar talks on bringing Bengali flavours to life in Pune
Bankrate senior industry analyst Ted Rossman also stressed the importance of starting early. “Every dollar you set aside in your 20s will compound over time,” he said, calling compound interest “the eighth wonder of the world.”
While soft savings reflect evolving attitudes towards work and well-being, experts caution that enjoying the present should not come at the cost of future financial security.
