In Singapore, it's ingrained in our DNA to plan long-term-especially when it comes to our finances. Well, it's mainly driven by the fact that we live in the world's most expensive city. Not to mention, that cost of living has soared with inflation. The moment we start adulting, we find ourselves saving consistently towards buying a house or building a nest for eventual retirement. 

However, Gen Zs are disrupting this "tradition" with a different take on their financial philosophy. Instead of squirrelling money away for a rainy day, they're reallocating their hard-earned income to improve their immediate quality of life. This lifestyle concept is known as "soft life", and the financial approach to it is termed 'soft saving'. 

Why does Gen Z view financial security so differently from other generations?

Gen Z's distinctive outlook on financial security has been moulded by their experiences.

• They grew up with their parents being impacted by the 2008 financial crisis, showing them just how unstable things can get.
• Then there's the global pandemic. This hit at an untimely moment when many of them were kick-starting their careers, bringing about question marks to financial stability and career prospects.
• They're grappling with hefty student loans and getting a taste of debt's burden from an early age.

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Moreover, social media platforms like TikTok and Instagram have empowered Gen Z to share and glean from each other's experiences. These platforms reinforce the belief that expenditure on activities that bring joy and enhance mental health is acceptable, leading us all to lean closer to understanding and adopting this invigorating viewpoint.

A comparison: Soft saving Vs hard saving

The soft appeal

Many traditionally throw themselves into 'hard saving' — working strenuously and saving fervently for future milestones. However, by the time they can reap the benefits of their toil, they are often too old or unwell to do so.

Their hard-earned savings may just go towards paying for medical bills. Moreover, the high-stress lifestyle that accompanies 'hard saving' can be rather dismal.

GenZ or "Soft Saving lovers" aspire to make the most of life whilst they're young and fit, rather than waiting till retirement. They will lean towards investing in:

• Travelling to immerse themselves in new cultures and experiences
• Personal development to boost career prospects
• Wellness activities to maintain mental and physical health

Soft saving offers immediate satisfaction and motivation, which can be a real morale booster. Instead of perpetually feeling like they’re playing catch-up, they enjoy regular doses of satisfaction and enhanced well-being. 

According to Travel Agent Central, 62 per cent of Gen Z are working and saving up to travel. 69 per cent say they like to keep things affordable but don’t mind splurging now and then. They are preparing for a broad spectrum of enriching, life-enhancing experiences, including:

• Experiential dining that stimulates the senses and deepens cultural understanding
• Digital detox retreats that offer a much-needed break from constant connectivity
• Sustainable travel that aims to minimise environmental impact

Is the traditional "Work 'til you're 65, then retire" model redundant?

You're familiar with the drill, right? Labour till you're approximately 65, then call it a day. This concept relies on you saving sufficiently or amassing a respectable pension to cover the years you're not working. But Gen Z is rewriting this narrative, examining alternatives like phased retirement and generating passive income.

Phased retirement is akin to gently transitioning into retirement rather than abruptly plunging in. You gradually reduce work hours or responsibilities as you approach the conventional retirement age. It's a smoother process and allows you to continue earning while you begin to savour all that newfound leisure time.

Passive income is all about establishing income streams that require minimum to no effort on your part. Think rental income, dividends from investments, or revenue from a side venture. This strategy could help Gen Zs retire earlier, or cushion the financial impact of a reduced income post-retirement.

Furthermore, Gen Z is capitalising on tech and remote work opportunities to strike a balance between work and play throughout their lives. These possibilities mean they can work at their own pace, from any location, and exercise greater control over their work-life equilibrium. This blended approach emphasises living in the present while still planning for the future.

What does the rise of soft saving mean for the FIRE movement?

To put it succinctly, soft saving and the FIRE movement are two sides of the same fiscal coin. FIRE, an acronym for "Financial Independence, Retire Early", revolves around rigorous saving to escape the humdrum 9 to 5 routine early, perhaps in your 30s or 40s.

It adds a touch of joie de vivre to the journey towards financial freedom. Instead of deferring the pleasurable bits to a later date, soft saving harmonises immediate enjoyment with future savings. In essence, it's crafting a more congenial and holistic financial blueprint. Rather appealing, isn't it?

How can soft saving become a long-term strategy?

The appeal of soft saving may be apparent now. However, a crucial question remains: how can one ensure its long-term sustainability? The key lies in striking a balance between immediate desires and potential future needs. 

1. Mindful Spending: Be conscious of where your money is headed. Ensure it aligns with your values and contributes positively to your well-being, without inducing stress.
2. Regular Saving: Regardless of your earnings, always earmark a portion for the future. This includes provisions like retirement and an emergency fund for unforeseen circumstances.
3. Diversified Investments: Disperse your money across various assets. This can provide additional income and facilitate the growth of your wealth over time, making your soft saving journey more manageable.
4. Budgeting: A budget will help regulate your expenditure. It guarantees sufficiency for essentials and allows for enjoyment without bleeding your wallet dry.
5. Financial Education: Continually educate yourself about money management. The more knowledgeable you are, the more informed your decisions will be, and the more sustainable your soft saving strategy.
6. Seeking Professional Advice: Engage with a financial adviser. They can provide strategies tailored to your circumstances, helping you balance soft saving with traditional methods and keep your finances in check.

In conclusion

'Soft saving' isn't just the latest buzzword for Gen Z's money management style. The idea is about maximising life’s experiences now without neglecting the future. It’s not about spending recklessly. Instead, it’s a savvy strategy that takes into account personal well-being and growth in the present.

As it turns out, anyone, irrespective of their age, can adopt this strategy. The trick is to find that sweet spot between living in the moment and securing the future.

ALSO READ: 30 with zero savings: 5 money habits I wish I knew when I was younger

This article was first published in MoneySmart.