Soft saving is Gen Z’s reaction to uncertainty. While many boomers and Gen X saved furiously, relinquishing small joys and living on rice and beans to be able to afford a down payment and a promised future, times have changed. A global pandemic, growing wealth disparity, inflation, and skyrocketing house prices make it hard to envision the classic lifestyles that were once the standard.
Hard saving techniques like penny pinching seem pointless now in a world where you never know what can happen tomorrow. Gen Z prioritizes their mental well-being way more than the generations before them. Budgeting for things like therapy, a vacation, or small joys like lattes or brunch with friends isn’t necessarily cheap, but can put you in a better headspace, which some may say is priceless.
Timelines-
Life is no longer linear; the standard timeframe of school, job, marriage, house, kids, and retirement has become scrambled or out of the question for many individuals. Saving for a future that may never pan out the way you expected. You may want kids later in life or not at all. Saving for a house may no longer be a priority if you want to rent and focus on travel. You might struggle to find a consistent and steady job, even if you possess a higher education.
The dissolution of life’s typical itinerary has left Gen Z and many millennials throwing their hands up, saying screw it. If the future is not guaranteed, then you might as well enjoy your life in the present moment. If that means booking that European vacation, treating yourself to a spruced-up wardrobe, or weekly blowouts, then at least when global warming burns us to a crisp, you can say that you enjoyed your time here while you had it.
Hard Saving-
Hard saving is when you spend money only on necessities and bills and save everything else. Just like extreme dieting, hard saving may be good for a little while. When you have no wiggle room for anything fun or enjoyable, you might start to get depressed and resentful of your money-saving madness.
At a certain point, when you get sick of saving, you might start splurging and doing more damage. If you’re saving up for a house, car, or large purchase, a few months or so of hard saving isn’t necessarily the worst idea, but long-term, it might get annoying. That’s why sprinkling in soft saving can help you better stay on track and not lose sight of your goals.
Hard saving can be a good option if you’re starting your financial journey, have zero savings, and excess debt. A few months of strict money management to build up an emergency fund can leave you with some wiggle room to enter your soft savings era comfortably.
Financial/Mental Wellness-
As much as money might be a made-up construct, it really can have a detrimental impact on your mental health. If you can’t afford basic necessities, your mental wellness can take a serious toll. While uncomfortable at first, sorting through your finances is crucial to save you mental turmoil in the long run.
How to find the balance of building up a savings account and planning for your future while also enjoying today?
Keep Tabs-
Just because you’re soft saving, doesn’t mean that you get to run away from your finances. As scary as it might be (especially after a big purchase or expensive week) to check your bank account, do it at least weekly or bi-weekly. When you don’t check your account for a while, you’ll be in for a shock even if you don’t feel like you spent that much money.
Many little expenses add up and can rack up your credit card and incur interest charges. When checking your bank account, tally up what you spent that week or that month. Without judgment, assess what really brought you joy and you don’t regret spending, or what purchases were made because you were either
- bored
- trying to numb emotions
- impulsively buying without waiting a bit first
There’s nothing wrong with spending money, but do so intentionally. If your morning croissant at your local bakery gets you excited to start the day, then keep it up.
Autonomization/Pay Yourself First-
Set up automatic payments into a savings account or several accounts of your choice. Review your monthly income vs expenses and come up with a realistic number that will grow that account, yet still leave you with spending money leftover. Making this automatic takes off the mental load of deciding between your savings account and that vintage sweater since the work is already done for you.
Figure out a number that is realistic to where you’re at financially. If you’re already barely scrapping by, a few hundred dollars every month into a savings account might not be feasible. If you can only put $50 or even $25 a month, it’s still something. Whenever you become more comfortable financially, you can increase this amount.
Set Goals-
Saving can be more challenging if you don’t know what you’re saving for. Write down a list of 3-5 money goals you have. They might include saving up for school, paying off a loan, or a bucket list travel destination, long-term financial goals, or starting a business. Whatever your goal, having a purpose can help to keep you on track when you feel like giving up.
Choose your Splurges-
There may be a few things you just can’t live without that bring you joy. That pricey face mask, monthly trips to the nail salon, or weekly happy hours. If you’re not willing to give up certain vices that bring you happiness, then that’s okay, but you’ll have to cut some things out to build up a little bit of emergency savings.
Can you make coffee at home, or learn to do your own nails? Again, having a few splurges that you’re not willing to give up is cool, but if you’re regularly buying daily coffees, bi-weekly mani/pedi’s, eyelash extensions, monthly facials, regular shopping sprees, and unlimited food delivery, something’s gotta give.
You’re going to need to pick a few things that you can realistically live without or do yourself at home. Keep a couple of little luxuries so you don’t feel you need to drastically change your lifestyle to save money, which could leave you with a negative concept of saving.
Money Date-
A cute idea is to take yourself on a money date. Spend a couple of hours in a coffee shop, library, or at home reading and researching a money concept that you previously didn’t know much about. There are many concepts, yet many are scared of linguistics and don’t take the time to learn about it.
The more you know, the better you can see what saving or budgeting techniques, investment strategies, or retirement plans align with you the most. Just like in our monthly curriculum post, where you pick new topics to learn and focus on, include financial literacy. Finance might seem intimidating, but the more you know about it, the more power you hold.
Topics you can research include:
- Roth IRA
- 401k
- investments
- retirements
- stocks & bonds
- mutual funds
- assets & liabilities
- interest rates
Acknowledge Accomplishments-
Even if your soft savings are minor, it’s still important to celebrate the steps you take toward your progress. Make a chart to track every time you add to your savings and give yourself a checkmark or gold star to help keep you motivated to continue.
Final Thoughts-
Finances have always been a little scary. They’re even scarier today with the cost of food, rent, homes, gas, and other expenses. Soft saving is Gen Z’s response to the current economic climate. Prioritizing mental well-being by still spending money on life’s small pleasures. Things like social outings or beauty products can make you feel better and help you get through the day.
The key to soft saving is balance. Balancing smart money management with intentional spending. Keep track of your income/expenses to ensure that you’re not spending above your means. Save whatever you can, and leave a little extra remaining so that you can still enjoy your life and make yourself happy.
Set up automatic payments into your savings accounts to take the mental load out of it. Set specific savings goals to propel you when you feel unmotivated and acknowledge your accomplishments along the way. Don’t be afraid of spending and live in a scarcity mindset. Spend money intentionally on a couple of things that really bring you joy and cut out the rest.
Keep in mind that if you’re starting from scratch, a few weeks or months of hard saving to build up a financial cushion can help you relax, knowing your basic needs will be met. After that, you can oscillate between hard and soft savings depending on how far or close your goals are. Hopefully, this soft saving strategy can help you get ahead and live a life you love, while also being financially secure.
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