It’s always a big change when you move to another country, especially when you head off to the developing world. I lived abroad in China for six years, and that period of my life opened my eyes up to a very different way of life and culture around money and finances.
Here are three lessons I learned that can help you revamp your relationship with money and save, no matter where you live.
Save, Save, Save
China is renowned for its personal saving rate, which is the highest in the world. Chinese households save between 34-53% of their income, while Americans save 2%.
The main reason for the high savings rate is not cultural, although that is part of it. Chinese people don’t like to carry debt, and often make large purchases such as cars or houses completely in cash. Even nowadays, credit cards are just beginning to become widespread, and cash is king. As a foreigner, I didn’t have access to credit, and lived entirely on a cash budget.
But the bigger reason is structural: China doesn’t have a strong safety net, and people are only a generation or two away from poverty. The shared cultural experience of being a poor, developing country is very strong. Even now, after thirty years of economic growth, there are many people who are still poor. People have also lived through very tumultuous times as China has changed, and the fear of not having enough for the next downturn is pervasive.
Living in China, I was strongly influenced by this attitude. I couldn’t have taken on debt even if I wanted to, and I saved like I was retiring in a few months. I took public transportation, rode my bike, cooked at home, and saved, saved, saved. At one point, I was saving 66% of my salary. While I was making an upper-middle class salary for China, I also worried about not having enough, just in case.
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Do We Really Need Stuff?
In China, I was considered rich for two reasons. I’m Chinese-American from Hong Kong, and the fact that I hold an American passport often had people asking me if my family was rich because we’d had enough to leave. I never quite knew how to answer that question.
The other reason was that I just had a lot of stuff. I had less stuff than my American counterparts, but much, much more compared to my Chinese peers. When I moved out of one apartment and into a new one, my new landlord actually complained that I had too much stuff.
In Beijing, there was one period of time when I lived in an apartment next door to my landlord’s (not the same ones who complained), a middle-class couple with great jobs working at a major Chinese bank and on the 2008 Olympic Committee. When I went to pay my rent, they would invite me into their home. Compared to my stuffed apartment next door, they lived very simple lives. They barely had any furniture. Their large living room held a television and a dining table. That was it.
Between my two landlords, I questioned my own need to have stuff. Do I really need it, or do I just want it? Am I simply being influenced by advertising and cultural messages around consumption? It can be hard to see the signal for the noise when we are bombarded constantly with the message that we need to buy. China was a respite from that constant need to buy.
Wealth is Relative
In the United States, the culture of consumption means that we express ourselves through what we buy and what we wear. Although this attitude is also expanding to China with the rise of the middle class, there are still large parts of China where people simply don’t have the funds to “express themselves” in this way.
When I first started teaching English in the industrial city of Changchun, China, one of the most striking differences was simply my clothing. But not in the way I dressed. Many Chinese people, and particularly my students, didn’t change their clothes constantly the way we do in America. They would wear the same clothes every day. In Changchun, I saw people in only one or two outfits in the entire time I knew them. A memorable moment came when a student told me, “We think you’re rich because you change your clothes every day.”
That’s a moment I often think about now in the United States. Even now, after an economic downturn, Americans are in the global 1%. What is true wealth? I don’t believe it lies in being able to wear a new outfit every day. What I appreciate now about living in a developed country is very different from before I left. No wonder my Chinese counterparts thought I was rich just because I was American: it feels like a privilege to live in a place we can take for granted clean running water, blue skies, and the rule of law.
However, returning to the U.S. also meant returning to a way of life centered around consumerism. Having experienced a very different way of life, I find it hard to tap into our cultural narrative of needing to consume.
What about you? Have you experienced another way of thinking about money? Share your thoughts in the comments below.
Image Credit steveritchie