Gen Z embraces ‘soft saving’, study shows—in contrast to previous generations

Younger workers aren’t the big savers that their parents or grandparents may have been. The new trend is “soft saving”—spending more of your money in the here and now, while saving less for the future.

Gen Z has largely valued experiences over money, and they’re the ones leading the trend, The Prosperity Index Study by Intuit found, which generally comes in direct contrast to previous generations, who tended to value saving.  

According to the report, soft saving is all about leading a soft life—a lifestyle centered on low stress, comfort, personal growth and mental wellness. As far as Gen Z financial trends, the generation is also more likely to put their money behind their personal views. If that means enjoying a vacation now instead of saving up for one later, they go for it. They tend to support brands or people they believe in, Liz Koehler, head of advisor engagement for BlackRock’s U.S. Wealth Advisory business told CNBC.

(Of course, not everyone who is part of Generation Z has these values, the report is just reflecting on the generation as a whole.)

Three out of 4 Gen Z’ers would rather have a better quality of life than a ton of money saved up in the bank, the Intuit report showed.

Just because they’re not focused as much on saving doesn’t necessarily mean that this generation (or people who subscribe to the soft-saving lifestyle) is spending more. They may prioritize exercise, healthful food and happiness at work instead of purchasing luxury goods or vying for their next promotion. 

The “soft saving” trend isn’t just among the younger folks, though. The US Bureau of Economic Analysis reported that Americans are saving less money this year compared to the past decade. The personal saving rate—the amount of disposable income a person saves—was 3.9% in August compared to the 8.51% average in the past decade, according to data from Trading Economics.

Why are people saving less? According to Ryan Viktorin, vice president financial consultant at Fidelity Investments, it has to do with the pandemic. During lockdowns, people generally spent less money and are now spending more to “make up” for lost time.

And of course, enter inflation, which makes it harder to spend and save.

What about the future? Soft savers don’t even know if they’ll be able to retire—just 53% say they are on track to retire.

“I think this trend is in line with what I have been experiencing with clients in Generation X and younger. People are moving away from the standard pattern of life: Educate, then work, then retire,” Tim Melia, certified financial planner at Embolden Financial Planning LLC, told U.S. News and World Report.