For decades, Canadians worked hard and saved diligently to retire as soon as possible. That has been the traditional goal. But as Generation Z enters the workforce, this mindset may be shifting.
Some members of Gen Z, especially those in their late teens and early-to-mid-20s, seem to be taking a more thoughtful approach to work and money in response to the rising cost of living and a constantly unstable economy. With people living longer and needing more retirement savings, Gen Z could be the first generation to make working into their 70s and 80s a common practice.
However, Gen Z seems to be handling this well by embracing a trend known as “soft saving.” This approach emphasizes prioritizing personal and mental well-being over aggressively growing investment portfolios. It’s about living for today and reducing daily stress rather than endlessly worrying about the future.
Living in the Present
When browsing your phone, you’ve likely come across numerous life hack videos. While some may seem questionable, many showcase this generation’s creativity and problem-solving abilities.
Scrolling through TikTok reveals a wealth of soft saving tips, from stretching your food budget to a 100-day envelope challenge that can help you save $5,000. These videos all focus on living smarter with the money you have.
A recent survey by the financial technology platform Intuit supports this trend. Three out of four Gen Z respondents said they would prefer a better quality of life over having more money in the bank. Additionally, about two-thirds stated that their interest in finances is mainly to support their current interests.
Reconsidering the FIRE Movement
Gen Z seems to be rethinking what defines a successful career. Unlike previous generations, this group appears more willing to limit “billable hours” in exchange for greater flexibility in how they spend their time.
This contrasts sharply with millennials, who popularized the Financial Independence, Retire Early (FIRE) movement. FIRE encouraged extreme financial sacrifices to retire early.
Millennials took on side jobs, flipped properties, and invested in riskier ventures in hopes of a larger payoff. Some succeeded, with a few retiring early. However, others found that early retirement came with its own challenges, such as boredom, realizing that work offers more than just a paycheck. The soft savers’ approach seems to balance work and leisure more effectively.
Smarter, Not Harder Saving
The Intuit survey indicates that two-thirds of Gen Zers are uncertain they’ll ever have enough money to retire due to ongoing economic challenges. For them, the solution appears to be working and saving smarter, not harder.
Soft saving is an extension of the “soft life” trend, where Gen Zers focus on a quality life with less stress. The renewed interest in thrifting is a prime example.
Beyond the money-saving benefits, Gen Z may view activities like thrifting as a way to improve their future quality of life by making spending choices that also help the environment today. This lifestyle might be partly a result of the socioeconomic changes brought about by the COVID-19 pandemic, which altered how most people work and live. Gen Zers are seeking a balance between the two.
This philosophy is also shaping how Gen Z approaches work. Many are embracing the new remote and hybrid work models as a way to enhance their quality of life. Technological advancements like ChatGPT are viewed not as threats but as tools to reshape how work is done.
Can Soft Saving Succeed?
Prioritizing your quality of life over work and savings doesn’t mean you’re ignoring the future. As you save money and find new ways to reduce spending, consider putting those savings to work.
For example, setting up an automatic transfer to your investment account could help you set aside extra money each month, giving you more financial freedom in the long run. Don’t underestimate the power of compounding on your investments, which can help your savings grow significantly over time.
In a time when it feels like everyone is trying to take your money, using a Tax-Free Savings Account (TFSA) or a First Home Savings Account (FHSA) can also help you keep more of it by reducing your tax burden. If you prefer the flexibility of renting, a TFSA can still help you save for the future without limiting your access to your money when you need it.
The Intuit survey suggests that Gen Zers are financially savvy and have more access to saving and investing information than any previous generation, though they may need help putting that knowledge to good use. Beyond TikTok videos, there are other steps you can take, such as investing, to boost your savings.
Don’t worry if you’re not sure where to start. About two-thirds of the Intuit survey respondents said they know it’s important to invest, but they’re unsure how to begin. Go at your own pace, and do your research to ensure you’re comfortable with the risks involved.
Financial literacy is essential at any age, but it’s especially important when you’re young and have fewer financial resources. Losing money on trendy stocks or investing in speculative areas like cryptocurrency can set you back on near-term goals, like buying your first car or saving for a down payment on your first home. (The Intuit survey shows that about half of Gen Z respondents bought cryptocurrency even though they don’t fully understand how blockchain works.)
Life Changes Quickly
As your goals change over time, a soft saving strategy and the financial habits you develop today can become the foundation for managing your financial needs in the future. Good money habits will be crucial if predictions about the upcoming Great Wealth Transfer hold true. These predictions suggest that over the next few decades, an estimated $1 trillion could be passed down to younger generations of Canadians from their parents and grandparents.
TikTok tips can help you save more by cutting back on spending, but few talk about how to make those savings grow. By investing early, you also support your future goals — and what could be better for your well-being than that?
