The Chinese Secret to Saving Money Revealed

 Introduction

I'm thrilled to share with you in this post the Chinese secret to money saving, a custom firmly ingrained in practical methods and cultural custom. Several of these advices originate from my father, who personifies the image of a financially astute Chinese person. I want to impart to you these insightful ideas today.

I'm 100% Chinese, however I get asked if I'm half Asian lot. My father is from Shanghai, my mother from Beijing, and I've traveled to China a lot—two six-month stints in Hong Kong and Beijing, as well as many shorter excursions.

So take a seat and read on. Hi, let's get the show started.

Stunning Savings Rate in China

With a gross savings rate of 45.9% as of December 2021, the Chinese are one exceptional people. As such, roughly $46 is saved for every $100 made. The U.S. savings rate, in sharp contrast, usually falls between 3.5% and 5%. Why does there exist this big difference?

Cultural Differences in Saving Habits

Mostly cultural. American consumerism is well embedded. Sale, discount, and finance choices are all around us, and there's social pressure to keep up with our neighbors. This consumer culture originated in the post-World War II period when patriotic consumption was promoted to stimulate the economy.

It's all about saving in China. There's a big dislike of debt and money is very important. Many Chinese would much rather pay cash for items than finance them and get up debt.

The Importance of Saving in Chinese Culture

Adopting some of these ideas will be made easier if you know why Chinese people save money. Chinese kids learn early on that it is respectable to save money. At birthdays and New Year's, they get money in red envelopes, which they are urged to preserve. Prosperity and good fortune are represented by this "lucky money."

The Chinese New Year greeting "恭喜发财" (Gong Xi Fa Cai) emphasizes the value of money even during the holiday. Savings is further encouraged by the society assumption that people with money are generally successful.

Demographic Factors

A further factor affecting saving practices was China's late 1970s and early 1980s one-child policy. Less children means that families could save more. Men were under more pressure to succeed financially because the desire for male children created a gender imbalance and more men were vying for fewer women.

Lack of Retirement Systems

Retirement savings are widespread in the United States, but not in China. There is a pension system, but many Chinese save for their future requirements on their own since they are dubious about its dependability.

The Chinese Secret to Saving Money

Detailed budgeting is the key. Wherever his money was going, my dad knew. This idea fits nicely with the zero-based budgeting approach, in which you set aside every dollar of your income for particular spending, savings, and investments with the goal of having your income less your costs equal zero at the end of the month.

Key Strategies for Saving Money

Numerous Chinese people save money using the following four primary methods:

• Avoiding Luxurious Goods: The majority of Chinese people would rather be modest and refrain from buying status symbols. More important to them than luxury are value and usefulness.
• Living Below Their Means: Having originated from a low-income family, my dad learnt to subsist on a tiny portion of his salary. This practice of living cheaply and conserving as much as possible is widespread.
• Chinese people carefully differentiate between needs and wants. They spend on necessities, particularly those connected to health, and they choose wisely and based on values what is not necessary.
• Having Dinner at Home: Dining out is seen as a luxury. Since most meals are made and consumed at home, substantial financial savings are made. We save dining out for really important occasions.

Conclusion

With any luck, my observations and advice will motivate you to start some of these frugal routines. Tell me in the comments whether this post was useful to you. And like the Chinese would say at New Year's, Gong Xi Fa Cai (恭喜发财), which translates to "I hope you get rich."