You may have heard the phrase in conversation, or seen the hashtag as you scroll Instagram or TikTok. But, what’s all the fuss about?

What is “Soft Saving”?

Rather than accumulating funds in long-term savings or retirement accounts, soft saving promotes spending the money now — generally on experiences and “quality of life” purchases.

Soft saving is thought to be an indirect response to the FIRE movement and hustle culture. The idea behind FIRE (an acronym that stands for “financial independence, retire early”) is that by making the correct lifestyle choices, you can save enough money to stop working much younger than the traditional retirement age of 65 (proponents argue retirement at age 35 to 45 is possible).

When Did This Trend Begin?

The term “soft saving” began to gain steam in the summer of 2023, as an extension of the “soft life” phenomenon that emerged in late 2022. Older generations often criticize younger ones for being less mentally tough, which is where the “soft” moniker comes in.

For some, especially in the aftermath of the COVID-19 pandemic, there has been a noticeable shift in priorities when it comes to saving. Instead of saving for a future that’s not promised, people are investing their money into their own personal growth and mental well-being.

Who is Primarily Doing it?

Generally, younger investors have been more quick to adopt soft saving. Gen Z workers at the beginning of their careers may feel like they’re hopelessly falling behind.

Per Cullen Roche, the US Dollar has lost 17% of its purchasing power since April of 2020. Per Anthony Pompliano, housing affordability has become a national crisis.

If you don’t believe you’ll ever be able to afford a house, AND if you don’t believe that your dollars will maintain their purchasing power — as a result of irresponsible government spending and monetary policy — why not spend it now while it’s still worth something? This mindset of living in the moment feeds into the idea of soft saving.

Why Could Soft Saving be a Mistake?

The famous Stanford Marshmallow Experiment has demonstrated some of the qualitative benefits of delayed gratification. Wim Hof has demonstrated that the short-term pain of ice baths can have long standing mental health benefits.

Decisions about how to spend and save are not only about dollars and cents. Sometimes not getting what you want today can motivate you to become a better version of yourself tomorrow.

The declining purchasing power of the dollar is the reason why I’m such a big proponent of educating investors about Bitcoin. I do not see irresponsible fiscal and monetary policy from our government changing anytime soon, so I believe investors — especially younger ones — should understand their alternatives to the more traditional ways of saving.

via Getty Images / Jamie Grill

How Should Gen Z be Saving for Retirement?

I believe it’s helpful to think about saving in different buckets. If you want to maximize your “soft saving for NOW” bucket, go for it! However, you should at least run some financial projections to understand the impact of limited savings in your “later bucket,” and where that leaves you 30 years from now. Your future self might thank you.

Make Informed Decisions for Your Financial Future

At Crossover Capital, our number one goal is to provide people with the support, knowledge, and access to make informed decisions about their financial futures. Building a foundation for success starts with steady support and a customized approach. Crossover Capital is here to provide the necessary tools required for growth and to be a champion for our clients’ success.

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