Nearly three in four Gen Z Americans would choose to have a better quality of life than extra money in the bank, a new study has shown.
According to a report from financial tech platform Intuit, 73 percent of those aged between 18 and 25 would rather use their money to enhance their life in the present than put it toward future savings.
This so-called ‘soft saving’ trend is ‘the soft life’s answer to finances,’ the report said. A ‘soft life’ is a lifestyle which prioritizes comfort, low stress and wellness.
‘It’s all about personal growth and mental wellbeing in the now, and they would rather feel more fulfilled now than save for a future that is unknown,’ the study reads.
Intuit found that 2 in 3 Gen Z Americans are only interested in finances as a way to support their other interests in life – compared to 61 percent of the general population.
Young people are more likely to embrace a ‘balance between the traditional “hustle” to save every single penny and using some of their extra income to enjoy life now,’ Ryan Viktorin, vice president financial consultant at Fidelity Investments told CNBC.
According to the study, 73 percent of Gen Z Americans say the current economy makes them hesitant to set up long-term goals. This is compared to 63 percent of the general population.
It found that Gen Z and Millennials – those aged between 26 and 41 – were more willing to spend on non-essential purchases and hobbies than older generations.
Some 40 percent of Gen Z and 47 percent of Millennials said they needed money to pursue a passion or hobby, compared to 32 percent of Gen X and 20 percent of Boomers.
The study classified Gen X as Americans aged between 42 and 57 and Boomers as anyone over 58.
It found 37 percent of Gen Z and 45 percent of Millennials said they needed funds to make non-essential purchases – while just 31 percent of Gen X and 25 percent of Boomers expressed the same need.
Personal savings rates appear to mirror this rise in the ‘soft savings’ trend.
According to latest data from the Federal Reserve Bank of St. Louis, Americans are saving less in 2023.
The personal saving rate – which is the proportion of disposable income Americans set aside for savings – was just 3.9 percent in August, compared to the 8.51 percent average in the past decade.
But experts warn that young people should not lose sight of saving for the future.
‘Spending money on things that truly make you happy is great,’ Andy Reed, head of investor behavior at investment firm Vanguard told CNBC, ‘but people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely.’
The Intuit study found 2 in 3 of Gen Z said they were not sure that they would ever have enough money to retire.
And separate research revealed that more than half of working Americans feel they are falling ‘behind’ on their retirement savings – which could significantly set them back in later life.
Rampant inflation and higher interest rates are eroding workers’ opportunities to save for their twilight years – sparking fears of a nationwide ‘retirement crisis.’
The latest study by personal finance website Bankrate found around one-quarter of Americans had not made retirement contributions in at least a year.
Meanwhile one in three said they felt ‘significantly behind on their retirement savings.’
