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Over the years, the FIRE Movement has been a trend of early retirement savings that focuses on creating retirement money to live in dreams as quickly as possible. Nevertheless, there is a new savings trend in new generations which is called “Soft Saving” What does this saving trend look like? Let’s find out, shall we?
‘Soft Saving’ is a new financial trend among new generations that saves less money for future use, to spend more money on present life to improve the experience and quality of life.
It seems like new generations tend to use their money wastefully, right? In fact, behind this idea is Gen Z people’s response to the FIRE era and hard-working culture. The Prosperity Index Study of Intuit, a major financial software company, in early 2023, found that;
Even though Gen Z people always learn and find information about making money, investing, and saving, it’s not as tense as the previous generation. They focus more on growing and developing themselves, including their current mental health.
Information from the U.S. The Bureau of Economic Analysis showed that in 2023, Americans saved significantly less money at 3.9 percent last August, from an average of 8.51% over the past 10 years.
The causes of less savings of Americans is from less spending during the Covid-19 pandemic in the past few years. When the situation seems to get better, people tend to spend more money. Moreover, inflation also causes people to use their money more. Less savings also reflect changes in financial targets among working people, especially younger workers, who prioritize money differently than before, by balancing extra work to earn money and spending the increased money to make a better life.
As for Thailand, it is now found that the overall savings rate of Thai households has returned to a downward trend, resulting in household debt that currently stands at more than 90% per GDP and is likely to decline slowly.
When life goals are not retirement, sleep on salaries as they used to be because of economic fluctuations, war, and inflation, people in this generation feel anxious and insecure about their retirement.
This concept also happens to new generations. Two-thirds of Gen Z people are unsure how to make enough money to stop working. However, this concern may be less worrying for the younger generation because most do not want to retire at an early age, some do not even want to stop working.
According to a study from the Transamerica Center for Retirement, from when people used to see retirement as a vacation and travel, turned out that 41% of Gen Z people and 44% of Millenials (27-42 years old) expected that even in retirement age they would still work, only 31% of Gen X people and 21% of Baby Boomers that thought so.
This means that younger generations view the word ‘retirement’ as it may not happen at all because they end up choosing to keep working as long as they can, but there are plans about savings after retirement with funds.
When the younger generation spends more and saves less, 47% of Gen Y and 40% of Gen Z are willing to spend more on hobbies and unnecessary things like travel and entertainment than Gen X and Baby Boomers which is only 32% and 20%, respectively.
Even though the younger generation is saving less, they’re not living paycheck-to-paycheck, they’re spending it under their earned income, and spending more money is reflected from inflation in rising prices of goods from inflation rather than buying luxury goods.
