Financial Planning for Young Adults

Generation Z is redefining financial planning by adopting the ‘soft saving’ approach, focusing on present well-being without compromising financial responsibility. ‘Soft saving’ is a financial mindset where individuals prioritize current quality of life over aggressive long-term savings. Unlike the FIRE (Financial Independence, Retire Early) movement, which emphasizes extreme frugality to retire early, soft saving encourages a balanced approach to spending and saving. This financial planning for young adults has gained traction among Gen Z due to economic uncertainties, rising living costs, and a desire for mental well-being.

Financial Planning for Young Adults

The Rise of ‘Soft Saving’ Among Gen Z

Recent studies highlight a significant shift in financial priorities among younger generations:

For instance, a 2025 Harvard survey found that over 40% of young adults are “barely getting by,” with only 16% feeling financially secure (Investopedia).

Similarly, an Intuit survey revealed that 73% of Gen Zers prefer a better quality of life over extra money in the bank, and 66% are uncertain about ever having enough money to retire (Investopedia, Intuit®).

These findings indicate a generational shift towards valuing present experiences and mental health over traditional financial milestones, which has led to the rise of the ‘soft saving’ mentality (Investopedia, New York Post).

Practical Steps for Financial Planning in the ‘Soft Saving’ Era

While embracing ‘soft saving’, Gen Z can still maintain financial health through the following strategies:

1. Budgeting with Flexibility

It’s essential to adopt budgeting methods that allow for both necessities and discretionary spending. Here are a few strategies:

  • 50/30/20 Rule: Allocate 50% of income to needs, 30% to wants, and 20% to savings (Time, College Ave).
  • 60/30/10 Rule: In high-cost areas, adjust to 60% for needs, 30% for wants, and 10% for savings (Time).

These frameworks provide structure while still accommodating individual financial situations, helping Gen Z strike a balance between enjoying the present and saving for the future.

2. Automated Savings

Utilizing financial apps that automate savings can be a great way to stay on top of financial goals. For example, apps like Piere help users optimize their savings by moving funds from low-interest accounts to those offering up to 4.5% interest (Business Insider). This approach ensures consistent saving without requiring constant attention.

By automating savings, Gen Z can easily set aside funds for future goals while focusing on their current lifestyle.

3. Emergency Funds

An emergency fund is crucial in the ‘soft saving’ era. Financial experts recommend having enough saved to cover three to six months of living expenses. This fund ensures that unexpected expenses, such as medical bills or job loss, don’t disrupt financial stability.

4. Mindful Spending

Prioritizing spending on experiences and items that enhance well-being is an important element of soft saving. For instance, buying a high-quality, long-lasting product might be more valuable than constantly purchasing cheap, disposable items.

By aligning purchases with personal values, Gen Z can ensure their spending contributes to their overall happiness and quality of life.

5. Seeking Financial Advice

Engaging with financial advisors is an effective way to create personalized financial plans. In fact, the 2025 Northwestern Mutual study found that 55% of Americans aged 25–39 consider professional financial advice critical for long-term security (Northwestern Mutual). This step can help Gen Z balance current enjoyment with future financial goals (Investopedia).

By working with experts, young adults can gain a clear roadmap for achieving both short-term and long-term financial security.

Balancing Present Enjoyment with Future Security

While ‘soft saving’ emphasizes present well-being, it is essential for Gen Z to maintain a balance to ensure future financial stability. Here’s how they can integrate future-focused practices into their financial strategies:

  • Investing Early: Even modest investments can grow significantly over time due to compound interest.
  • Retirement Planning: Contributing to retirement accounts, even minimally, can provide long-term benefits.
  • Debt Management: Avoid high-interest debts and pay off existing debts promptly.

By integrating these practices, Gen Z can enjoy the present while still building a solid financial foundation for the future (MarketWatch, Investopedia, New York Post).

Conclusion

The ‘soft saving’ approach reflects Gen Z’s response to contemporary economic challenges, where mental health and present enjoyment take precedence. However, by adopting flexible budgeting, automating savings, and seeking professional financial advice, young adults can navigate financial planning in 2025 effectively.

Ultimately, balancing current well-being with future security will ensure a more holistic approach to financial health, allowing Gen Z to thrive both now and in the future.

References:

  • Investopedia. (2025). ‘Soft Saving:’ Why Gen Z Is Trading Future Wealth for Present Happiness. Retrieved from Investopedia
  • Intuit. (2025). 2025 Prosperity Index Study: The New Prosperity Playbook. Retrieved from Intuit®: Complete Financial Confidence
  • Business Insider. (2025). A personal finance expert saw her friends leaving ‘tens of thousands’ on the table with money mistakes. Retrieved from Business Insider
  • Northwestern Mutual. (2025). 2025 Planning & Progress Study. Retrieved from Northwestern Mutual
  • Northwestern Mutual. (2025). 2025 Planning & Progress Study. Retrieved from Northwestern Mutual
  • Time. (2024). Why a 60/30/10 Budget Could Be the New 50/30/20. Retrieved from Time