What is the 'soft savings' trend and why financial experts are warning against it?

When it comes to financial planning, Gen-Z is not following the path well-trodden. Unlike previous generations, American youngsters are more laidback when it comes to saving and financial security, according to a recent Prosperity Index study by Intuit.

The study found that young adults between the ages of 18 and 25 are more keen on investing in experiences that promote mental well-being and personal growth in the now, rather than saving for the future. This new trend, termed “Soft saving”, has been called Gen-Z’s answer to FIRE and hustle culture.

For those who may not know, FIRE is an acronym for “Financial Independence, Retire Early” – a lifestyle movement where people aim to save enough to retire young. Recent trends indicate that retiring early is not something that Gen-Z is interested in doing 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,” read the Prosperity Index study. “Though Gen Z is interested in exploring and learning about saving and investing, the approach is much softer than in previous decades - it's all about personal growth and mental wellbeing in the now, and they would rather feel more fulfilled now than save for a future that is unknown.”