What Is Soft Saving?

Summary

• Soft saving focuses on balancing long-term financial goals with present-day spending to support mental health, hobbies and well-being, often prioritizing flexibility and quality of life over strict savings targets.
• This trend, especially popular among Gen Z, emphasizes managing essentials, making smaller contributions to savings when possible, and spending on experiences, while adapting to high costs and economic uncertainties.
• While soft saving reduces financial stress and offers flexibility, it carries risks such as slower progress toward long-term goals and less preparation for emergencies, making balance and careful planning essential.

Saving for the future has always been a core part of long-term financial planning. However, some people are rethinking that approach by focusing more on their present-day enjoyment, needs and personal well-being.

Soft saving encourages people to balance long-term financial goals with spending that supports their mental health, hobbies and quality of life today. The shift is getting attention, especially among younger generations. Understanding how soft savings differs from traditional approaches can help put this growing trend in perspective and see if it’s right for you.

The basics of soft saving

Soft saving is a way of managing money, focusing more on living well today than maximizing long-term savings. It often means using extra income for travel, hobbies and other experiences while still covering basic financial needs and setting aside smaller savings.

Instead of following strict savings goals or aggressive budgeting strategies, soft savers focus on meeting essential expenses, maintaining a basic emergency fund, and saving for retirement (when possible). According to the Federal Reserve, 72% of adults report being at least “doing okay” financially in 2023, but many still reported feeling the impact of higher prices. About 65% of adults say price changes over the past year have worsened their financial situation, making it harder to prioritize some savings goals.

Even with inflation slowing down, the costs of essentials like housing and food remain high compared to just a few years ago. At the same time, many young adults don’t feel confident they can hit traditional financial milestones like buying a home or saving for retirement while dealing with rising student loan balances and concerns about economic stability.

Soft savers want to focus on managing today’s expenses, protecting their mental health by reducing financial stress, and maintaining flexibility with their money.

Examples of soft saving

Some may see soft saving as a reaction to earlier financial trends like the FIRE (financial independence, retire early) movement, which encourages people to save aggressively and retire decades early. Instead of aiming to maximize savings at all costs, some are choosing to balance saving with living well now.

As soft saving becomes more common, it shows up in a variety of real-life financial decisions. Here are a few soft savings examples:

• Spending extra income on travel, hobbies or experiences instead of buying a luxury car
• Choosing jobs with better work-life balance, even if they come with lower salaries, and potentially working longer
• Covering essentials but not focusing on building emergency fund or retirement savings as a priority
• Prioritizing mental health and daily well-being over hitting strict financial milestones

This shift may reflect how people are adapting their financial habits to today’s realities. Many experience high costs and uncertainties, which may make traditional savings strategies feel less realistic than in the past.

Pros and cons of soft saving

Soft saving can help people manage their finances with less stress, but it can also come with risks if long-term planning is overlooked.

Here are some pros and cons to consider:

Pros

• Can create more flexibility to manage rising costs and enjoy life today
• May support better mental health and reduce financial stress
• Allows some to prioritize personal growth, education or experiences alongside financial goals

Cons

• Could result in slower progress toward long-term goals
• May increase the risk of falling short during unexpected financial emergencies
• Could make it harder to build enough retirement savings to last
• May require ongoing attention to avoid lifestyle creep or overspending

For many, soft saving is about finding the right balance—supporting your well-being today while still preparing for the future when possible.

Hard saving vs. soft saving

When it comes to managing money, the difference between hard saving and soft saving often comes down to goals, structure and flexibility.

Hard saving typically involves setting specific, measurable financial goals, like building a retirement fund, buying a home or paying off credit card debt. These savings are usually tied to long-term milestones and often follow more strict budgeting approaches and timelines. Hard savers may be more willing to sacrifice today to ensure they have enough to meet future needs.

Soft saving, on the other hand, focuses more on balancing financial responsibilities with quality of life. Instead of actively working towards big-picture future targets, soft savers prioritize covering their essentials, setting aside small amounts towards savings and retirement when possible, and spending money on experiences or activities that support their well-being today.

Both approaches have their place. But the choice between hard and soft saving often depends on your priorities and life stage. Some find that it doesn’t have to be an either-or decision; they may adjust their strategy over time to fit their needs and goals as circumstances change. 

Gen Z and soft saving

Soft saving has gained momentum among Gen Z. Many are managing their finances during high living costs, economic uncertainty and shifting priorities around work and life. According to Intuit, 61% of 18- to 35-year-olds are financially stressed, and another 55% say their mental and physical health is tied to their financial well-being.

At the same time, this generation is skeptical about whether traditional financial goals are even realistic or desirable. A recent Harvard survey found that more than 40% of young adults are barely getting by financially. Only 56% feel confident they’ll be financially secure, and about half believe they’ll own a home, get married or have kids someday.

As a result, Gen Z soft saving trends tend to focus more on maintaining financial flexibility, covering immediate needs, and supporting their mental health. For many, the goal is to live well now while building financial stability over time, even if traditional milestones take longer to reach or change altogether.

The bottom line

Soft saving reflects how people, especially younger generations, are adjusting their financial habits to fit today’s realities. Instead of focusing on long-term milestones, many look for ways to balance present-day needs with future goals.

While this approach can offer more flexibility, it’s important to carefully consider how today’s financial choices could impact your long-term financial security.

FAQ

What is soft saving?

Soft saving is a financial approach focused on balancing long-term financial responsibilities with enjoyment and well-being in the present. It prioritizes covering essentials, maintaining a basic emergency fund, and saving small amounts for the future, while dedicating extra income to support hobbies, travel or experiences that enhance quality of life.

How does soft saving differ from traditional hard saving?

• Hard Saving: Focuses on specific long-term goals like retirement or buying a home, with strict budgeting and sacrifices in the present.
• Soft Saving: Prioritizes flexibility, meeting current expenses and enhancing daily well-being, with a less structured and more adaptable approach to savings.

What are the benefits of soft saving?

• Provides flexibility to manage rising costs and enjoy life today.
• Reduces financial stress and supports mental health.
• Allows room for personal growth, experiences and well-being alongside financial goals.

What are the potential downsides of soft saving?

• Slower progress towards long-term goals like retirement or homeownership.
• Increased vulnerability to financial emergencies due to minimal emergency funds.
• Risk of overspending or falling into lifestyle creep.

Why is soft saving popular among Gen Z?

High costs of living, economic uncertainty and shifting priorities around work and life have driven Gen Z to adopt softer saving strategies. Many prioritize financial flexibility, mental health and immediate needs, and they are often skeptical about achieving traditional milestones like homeownership or early retirement.

Can you mix hard and soft saving strategies?

Yes! It doesn’t have to be a choice between one or the other. Balancing both approaches can help meet immediate needs while still preparing for long-term financial security. Adjusting strategies as circumstances change is key.

Is soft saving right for me?

Soft saving may suit individuals seeking to reduce financial stress, focus on mental well-being, or manage today’s expenses. However, consider your life stage, financial goals and capacity for long-term planning to determine the best approach.