SINGAPORE: A financial paradigm shift among younger generations, including Singaporeans, specifically Generation Z, is the practice of “soft saving”, which is their financial philosophy to “make the most of life whilst they’re young and fit, rather than waiting till retirement.”

In a departure from the conventional approach of planning for financial milestones or retirement, Gen Zs are “reallocating their hard-earned income to improve their immediate quality of life.”

What is Soft Saving?

According to MoneySmart, this financial philosophy, known as “soft life,” challenges the traditional wisdom of saving for retirement and property, reflecting a desire to “make the most of the present.”

Soft saving focuses more on travelling and immersing in new experiences, personal development, wellness and mental health.

What’s the Difference between Soft Saving and Hard Saving?

The difference between soft saving and hard saving lies in their focus and approach.

Hard saving is the traditional method of saving for significant life events such as retirement, property, and other long-term goals.

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On the other hand, soft saving prioritises savouring life in the present, nurturing mental health, and personal development.

While hard saving aims for a secure future, soft saving seeks to provide immediate satisfaction and motivation.

Why do Gen Zs “Soft Save”?

Travel Agent Central reports that 62% of Gen Z are working and saving for travel, and 69% prefer affordable choices but are okay with treating themselves now and then.

Gen Z’s inclination towards soft saving is shaped by their unique experiences, including the impact of the 2008 financial crisis and the uncertainties brought about by the global pandemic.

Witnessing their parents’ struggles during these economic downturns and the burden of student loans has influenced Gen Z to question the traditional approach to financial security.

Social media platforms like TikTok and Instagram further reinforce the belief that spending on experiences contributing to joy and mental well-being is acceptable, prompting a departure from the hard-saving mindset.

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How Does Soft Saving Work Long-Term?

While soft saving is often associated with immediate gratification, its long-term sustainability is a crucial consideration. To ensure the effectiveness of soft saving as a long-term strategy, one must strike a balance between immediate gratification and future needs.

As per MoneySmart, soft saving can work long-term when you:

  • Practice Mindful Spending: Be aware of where your money goes. Ensure it reflects your values and positively contributes to your well-being, avoiding unnecessary stress.
  • Commit to Regular Saving: Set aside a portion of your earnings consistently for the future. This includes planning for retirement and creating an emergency fund for unexpected situations.
  • Diversify Investments: Spread your money across different assets. This helps generate extra income and grow your wealth over time, making your soft saving journey more manageable.
  • Implement Budgeting: Create a budget to control your spending. Ensure there’s enough for essentials and leave room for enjoyment without draining your wallet.
  • Prioritize Financial Education: Keep educating yourself about money management. The more you know, the better your decisions will be
  • Engage with Financial Advisers: Seek professional advice. They can offer tailored strategies, helping you balance soft savings with traditional savings to keep your finances in check.
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Gen Zs are “rewriting the narrative.” Perhaps “labour till you’re approximately 65” may not be the only way to a fulfilling retirement after all. /TISG