Move over 'FIRE' method: Why Gen Z is embracing 'soft saving'
More young people, including those in Gen Z, are embracing "soft saving," a growing financial trend across social media.
With "soft saving," people prioritize spending some money to enjoy everyday life now instead of focusing solely on saving for retirement. "Soft saving" takes the opposite approach of past trends such as the "Financial Independence, Retire Early" or FIRE movement, that prioritized saving and investing money aggressively in order to try to retire early in your 30s, 40s or 50s.
Melanie Mannon is among those who have adopted the more laid-back approach.
"I'm saving and I'm still having fun in my current life," Mannon told ABC News.
Mannon said she divides some of her income for savings, some for expenses and some to use and enjoy now.
"I set aside 20% of my paycheck. It goes straight into my savings account, and then I use the rest to pay all my bills, and then whatever's left, I allow myself to spend it on experiences and things that I want to go out and do in life," Mannon said.
A Pew Research Center poll recently found that 82% of adults in the U.S. say it is harder for young adults to save for the future now, compared to past generations.
Kumiko Love, a financial counselor, told ABC News the sentiment holds water.
"We have to look at the financial environment Gen Z entered adulthood in," Love said. "Housing has become incredibly difficult to afford for many young adults. The cost of living has increased. Some traditional milestones can feel much farther away. So, it's understandable that younger people are questioning this idea that they should sacrifice everything today for a future that may feel very uncertain."
Love said there are easy ways to grow your money over time, such as using a high-yield savings account or a 401(k) employer-matched plan.
"Maybe it's saving every $1 bill that you come across. Maybe it's saving every quarter that you came across. Maybe you have a $5 Friday where you save $5 every Friday," Love said. "Little things like that that encourage us to save while having a little bit of fun as well."
Here's an example of a simple way to save without doing more work, according to Love: Start with $2,000 in a high-yield savings account or a certificate of deposit, or CD. You can earn interest through the account, with current rates up to 4.5%.
After one year, your $2,000 will have grown to nearly $2,100 and you get an extra $100 just for keeping the money in the account. You can find banks that offer these types of accounts and compare rates on websites like Bankrate.
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