News Of Austin – If you’ve ever decided to save less cash in your retirement account so you could do more traveling or support an expensive hobby, you might be “soft saving” (and not even know it).
At a Glance
- Soft saving lets people spend now and save less aggressively for retirement.
- It’s a growing mindset, especially among Gen Zers who avoid strict budgeting.
- Experts say it can start a consistent savings habit but may limit future growth.
- Why it matters: Knowing how soft saving affects long-term security helps you balance today’s pleasures with tomorrow’s peace of mind.
The concept of soft saving has become a buzzword in personal finance circles, describing a deliberate choice to prioritize present enjoyment over aggressive retirement contributions. It reflects a shift in values, where many prefer to feel the benefits of money today rather than wait for a future payoff. Understanding its implications is key for anyone planning both short-term adventures and long-term stability.
Soft saving is about choosing to spend money on things you enjoy today and stashing money away less aggressively for your later years. People who take this approach are more concerned about what they’re doing tomorrow than what they’ll be doing at age 65 or 70. This mindset focuses on the present rather than a distant future.
What Is Soft Saving?
Soft saving means spending money on current pleasures while still putting some funds aside for the future. It is less rigid than traditional budgeting, allowing flexibility for spontaneous trips or hobbies. The goal is to maintain a balance between the current you and the future you.
Rebecca Palmer
> “Soft saving is being more mindful about your lived experience now and not being willing to sacrifice too much in favor of your future yet,”
> “So, the balance between prioritizing future you versus current you.”
Rebecca Palmer, a certified financial planner in Washington, D.C., and head of guidance for financial planning platform News Of Austin. Her explanation highlights that soft saving is about mindful living, not complete neglect of savings. It acknowledges the desire to enjoy life without abandoning the idea of a secure retirement.
Soft saving is not a new phenomenon – for years, people have chosen current wants over elevated saving for future needs. The trend is a purposeful mindset shift, especially among Gen Zers who’ve watched their parents navigate strict rules around money and budgeting. They want a different financial lifestyle, free from the constraints that defined the previous generation.
Jesica Ray
> “They said, ‘I’m not going to do that because I don’t really care what’s in that bucket when I’m 50 years old, I care about using that money now and knowing it’s not tied up in some retirement account that I can’t access until I’m 59,'”
Jesica Ray, a certified financial planner with News Of Austin in Washington, D.C. Ray’s client illustrates the mindset: focusing on immediate liquidity over distant retirement goals. The conversation shows that many young adults view retirement accounts as inaccessible and irrelevant to their current priorities.
Nicole Lapin
> “I really felt allergic to this idea of budgeting when I was getting my own financial life together,”
> “It felt really scary. It felt like, ‘Wow, I can’t have any fun.’ Where are the extras?”
Nicole Lapin, a Los Angeles-based financial expert, author and host of the News Of Austin podcast. Lapin’s remarks capture the emotional resistance to strict budgeting. She emphasizes the fear that budgeting could strip away the ability to enjoy life’s extras.
Pros and Cons
Soft saving can serve as a gentle entry into a consistent savings habit. It offers psychological relief, reducing anxiety about future finances. However, it may also hinder long-term growth if not managed carefully.
Pros
- Encourages a consistent savings habit for those hesitant to start.
- Provides immediate gratification, boosting motivation.
- Allows flexibility to adapt to life’s changing priorities.
Cons
- Smaller savings in the 20s can be hard to increase later.
- Lifestyle creep and added obligations may reduce available funds.
- Relying on memory or willpower can lead to inconsistent contributions.
| Aspect | Soft Saving | Traditional Savings |
|---|---|---|
| Flexibility | High | Low |
| Long-term growth | Potentially lower | Higher |
| Psychological comfort | High | Medium |
The table shows that while soft saving offers flexibility, it may compromise long-term compounding benefits. It’s easier to downsize your savings rate than to upsize it when obligations grow.
The advantage to starting with a higher savings percentage, Palmer says, is that “if stuff comes up, you might need that space.”
Is It Smart for Long-Term Goals?
Many experts argue that soft saving is not inherently irresponsible, especially if clients understand the trade-offs. It can be a stepping stone toward disciplined saving, provided it remains consistent and incremental.
Ray
> “I actually don’t think this is an irresponsible strategy,”
> “I like the idea of reframing the conversation to, ‘Is your money supporting the life that you want to have today?'”
Ray also notes that if clients understand the tradeoffs and choose to take certain steps anyway, “I think that’s OK,” she says. Her perspective frames soft saving as a conscious choice, not a neglect of future needs.
Palmer
> “If they don’t do some investing for the long term early on, they’re going to miss out on a massive amount of compounding interest, and later you have to work twice as hard to get half as far,”
> “Don’t rely on memory or willpower or ‘shoulds,’ – automate your soft savings,”
> “Then maybe have a check-in point for increasing that. Bump it up a little every quarter, every year, whatever that cadence is so you’re slowly building the space for more savings over time.”
Her advice stresses automation and gradual increases to capture the benefits of compounding. Consider having a financial professional run the numbers on your planned savings rates over time.
Finding the Middle Ground
Soft saving is about balancing present enjoyment with future security. The strategy involves setting clear savings goals while allowing room for discretionary spending. Professionals recommend using tools to project future outcomes based on current decisions.
What I do is show them, “If you do that, here’s what that means for the lifestyle you can afford when you’re in your 50s and 60s,” so they understand the impact of the choices that they’re making,” Ray says.
This approach keeps clients aware of the long-term implications of today’s choices. Soft saving doesn’t mean no saving – it means saving some while giving yourself room to enjoy your life.
- Save first, then spend the remainder.
- Automate contributions to ensure consistency.
- Schedule quarterly reviews to adjust rates.
- Allocate a small budget for indulgences to stay motivated.
Lapin also emphasizes the importance of planning for the future self. “I like to think about paying my future self, that old lady Nicole,” Lapin says. “Whatever that small indulgence is for you, allow for it in the overall plan so it keeps you on track and keeps you from binging later on.”
Key Takeaways
- Soft saving prioritizes current enjoyment while still contributing to the future.
- Consistency and automation are essential to avoid falling behind on long-term growth.
- Professionals recommend incremental increases and regular check-ins to build a solid foundation.
Balancing today’s pleasures with tomorrow’s security is the core challenge of soft saving. By setting clear goals, automating contributions, and reviewing progress regularly, individuals can enjoy life now without sacrificing future stability.
