Generation Z has a unique take on financial security that sets them apart from older generations. Their mindset, shaped by several impactful global events and trends, reflects a distinct approach to saving, spending, and life planning.
While financial stability has long been a priority for many, Gen Z’s experiences have shifted their perspective on how to achieve it and what it even means. They grew up watching their parents struggle through the 2008 financial crisis, a stark lesson in how easily things can go wrong. Then, just as they were beginning to enter the workforce, the COVID-19 pandemic hit, creating further uncertainty about job security and long-term career prospects.
In addition to these challenges, Gen Z faces significant student loan debt from an early age, learning firsthand the weight of financial obligations. All these factors contribute to a more flexible and holistic view of financial security—one that balances the future with the need for immediate fulfillment.
The Impact of Social Media
Social media platforms like TikTok and Instagram have also played a significant role in shaping Gen Z’s financial mindset. These platforms provide spaces where young people can share and learn from each other’s experiences, leading to the normalization of spending on activities that bring joy, improve mental health, and contribute to personal growth. Social media reinforces the idea that it’s okay to invest in the present, which can shift focus away from traditional long-term saving strategies.
This approach—sometimes referred to as “soft saving”—stands in contrast to the “hard saving” methods of previous generations, which emphasize preparing for major life events like buying a home, raising a family, or retiring comfortably.
Soft Saving vs. Hard Saving: A Comparison
The Appeal of Soft Saving
The traditional “hard saving” model often requires working long hours and making sacrifices for future milestones that may not pay off for decades. Many people who follow this route find that by the time they reach retirement, they are too old or too unwell to enjoy their savings fully. Additionally, hard savers may find that much of their accumulated wealth goes toward medical bills or other late-life expenses.
In contrast, many members of Gen Z, known as “soft savers,” believe in making the most of their youth while they are healthy and full of energy. Instead of waiting until they retire to enjoy life, they prioritize activities that bring joy and fulfillment now, such as:
- Traveling to explore new cultures and experiences
- Personal development to enhance career prospects and skills
- Wellness activities to maintain mental and physical health
Soft saving provides immediate satisfaction and encourages a balanced lifestyle. Rather than feeling like they’re constantly saving for a distant future, soft savers find fulfillment in the present, enjoying regular moments of happiness and well-being. This mindset, which prioritizes living well today while still planning for tomorrow, is reflected in their spending choices.
For instance, according to Travel Agent Central, 62% of Gen Z workers are saving up specifically to travel, and 69% say they focus on affordability but aren’t afraid to splurge occasionally. These young adults seek out a variety of life-enhancing experiences, including:
- Experiential dining that broadens cultural understanding
- Digital detox retreats to escape the stress of constant connectivity
- Sustainable travel that emphasizes reducing their environmental impact
Is Traditional Retirement Becoming Obsolete?
The old adage of “work until you’re 65, then retire” is no longer the standard for many in Gen Z. This traditional model depends on saving enough money or securing a solid pension to last through retirement, but younger generations are rewriting the script. Instead of following this rigid path, Gen Z is exploring alternatives such as phased retirement and passive income streams.
Phased retirement involves gradually reducing work hours or responsibilities as one nears traditional retirement age, providing a smoother transition from full-time work to leisure. This strategy allows people to continue earning income while adjusting to their newfound freedom.
In addition to phased retirement, many Gen Zers are actively seeking out ways to generate passive income—through investments, side hustles, or entrepreneurial ventures—well before reaching retirement age. These income streams offer flexibility and can support the “soft saving” lifestyle, allowing them to enjoy life now without sacrificing their long-term financial security.
A Changing View of Financial Security
Gen Z’s approach to financial security may seem unorthodox compared to previous generations, but it reflects a growing understanding that a balanced life requires both planning for the future and enjoying the present. Rather than adhering strictly to a retirement-driven savings model, they are forging their own path, one that values mental health, personal growth, and fulfilling experiences alongside financial stability.
As the world continues to change, so too will the definition of financial security. For Gen Z, it’s less about following the rules and more about finding a lifestyle that works for them—one that embraces both the demands of the future and the joy of living in the moment.