HomePersonal Finance» Chinese Money Habits – How My Culture Influences My Attitudes Toward Money
Chinese Money Habits – How My Culture Influences My Attitudes Toward Money
Photo:Elephant Mountain in Guilin – Xin Lu
I moved to the United States when I was a child from Yangzhou, China. After sixteen years, I could easily pass as an American because I speak English without an accent, and I am well versed with the popular culture. However, if you ever examined my attitudes toward money you will see that I am undeniably Chinese. Here are some of the principles I grew up with.
1. Being frugal is a virtue- Being frugal did not start as communist propaganda. Actually it is a concept that has been taught for thousands of years. The classic Chinese text Dao De Jing states that the three greatest treasures one can have are love, frugality, and generosity. Frugality is really a integral part of the Chinese culture
2. Save as much as possible- The personal savings rate in China is incredibly high compared to the United States. According to this2006 CNN article, the personal savings rate of Chinese households is 30% while Americans dipped into their savings that year. I know that my Chinese relatives regularly save 50 to 60% of their income and it feels normal to me that I save as much as them.
3. Pay for things in cash- Credit cards are still fairly rare in China and most people pay for everything in cash. What really impressed me is that many ordinary Chinese people were able to pay cash for their homes when the government allowed homeownership recently. The houses are not cheap, and it is amazing to see teachers and factory workers pull out savings equivalent to ten to twenty times of their regular salaries. Chinese people are wary of debt, and I think that is a good thing.
4. Always look for a bargain- In China, haggling is a way of life. If you ever visit China you have to ask at least 50 to 75% off in stores. This has been changing lately as high end stores are switching to the model of no haggling allowed. However you will still find plenty of vendors willing to negotiate. I think in America this particular bargain seeking behavior earned the Chinese the cheapskate stereotype.
5. Your salary is not a secret- If you ask a Chinese person in China how much money he or she makes, odds are that person will tell you. Discussing ones income is not always a matter of bragging because not everyone is rich. Most of the time I see Chinese people do this as a way of getting to know another person. Once you speak to people and find out their income they tell you more about how they live. It is not a rude or bad thing in my culture to talk about money, and sometimes good comes out of it. For example, my dad helped his friend secure a 20% raise after he found out that mans salary.
6. Cash gifts are the best- On every new year or birthday, Chinese children usually get cash gifts that they end up saving. This sounds pretty sad, but I remember being quite excited about visiting all the relatives and receiving red envelopes with cash in them. Red envelopes are the standard gift for any celebration, and they are considered the best gifts because the recipient can do anything with the money. In America it seems that cash is a less common gift because it is considered to be less thoughtful. Instead, cash is converted togift cardsor useless trinkets that are probably less appreciated by the recipient.
China has changed dramatically in the sixteen years I have been in America, but a lot of these money habits still remain. I know that the great influx of wealth in China is changing things, but I hope the country as a whole still advocates saving for the future. The biggest negative attitude towards money that I see in China is greed, but I do not think that is uniquely Chinese. Do you have any cultural specific money habits?
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This is really interesting. For curiositys sake, what is the average tax rate in China?
Ive given gift cards to family for the last several years — always to stores they frequent. But after reading about Sharper Image going bankrupt, and their gift cards being worthless, Im seriously leaning toward cash. I love the idea of the red envelopes.
You know that I need more sleep when I got all the way to the second paragraph before realizing that it was about Chinese Money habits… not Chinese Monkey habits…
This is what having babies will do to a person…
Except for items number 5 and 6, I think we could be related.
If I do have culture-specific financial habits, Im not aware of them. Most of them werent good, so I tried to avoid them like the plague.
When I lived in China there was no income tax because everybody worked for the government. These days there is a graduated income scale similar to that of the US. I heard that some rich folks can pay 40% or more in taxes.
Heres an illustration: Last year, there was a bit on local TV about a group of workers who bought lottery tickets together and won a fairly large amount of money. They showed three of the people and interviewed them about what they were going to do with the money. The first one said he was going to buy a new car and pay bills. The second one said she was going to remodel the house and buy some things for the grandchildren. The third, a Chinese man, was asked what he planned to buy. He answered Nothing. I will put it into my childrens education, because that investment will pay off when Im old. Ive told a lot of people about that, but many dont appreciate it.
Good one, Ginny. He was a very wise man.
Mean man. Parents should never expect money from their children.
I love cross cultural pieces. This was very interesting.
This was a really interesting article! Most of the points you made fit really well with my money habits (haggling would take a lot of getting used to though).
I always ask for cash for my birthday/etc, but my aunts and grandma always want to get us things we can unwrap. Slowly but surely theyre coming around, but maybe this article would help =P
Whats strange is though I love getting cash as a gift, I still would feel guilty giving others cash for a gift (unless its what theyve asked for). I am pretty particular about getting gifts, I really try as hard as I can to get something I know the person will love. Now that I think of that, maybe Im forcing them to be frugal in a way–giving them something that I know theyll use.
I enjoyed this very much. Some of these habits, such as the frugality, savings, and cash-only purchasing are also American cultural values that have been lost quite recently. Even going back only 30 years, to my childhood, it was very uncommon for people to buy things on credit, and it was to some extent frowned upon.
My son has a birthday coming up, and I think I will suggest to his relatives that he would like money. It really is his favorite gift, and he has enough toys. What he really wants is to save up for big ticket items like game systems and computers. (We make him save a goodly portion of it, too.)
Yes, because my parents grew up during the Depression, my husband and I save most of our money (at least I was when I had a job; will get another…. ) I was pleased to read your story. Cash really is king
. People dont discuss money, salary…that is to our detriment.
This is my favorite website. Everyone helps me a lot.
Being in the US for 10 years, I missed bargaining the most. Every visit to India, I make up for it. If you dont bargain, theres no fun in buying.Also,the vendor usually thinks youre dumb if you pay the list price,since bargaining is expected.
I miss the cash gifts too.We still give our daughter cash gifts here for birthdays, and she loves to save them.
Italians, too, give money gifts quite frequently. I received very few items for my wedding, and most of those items were from friends, not my Italian relatives. Even when I was five years old going to friends birthday parties, my mother would hand me a card with $10 in it.
At the time it seemed like I was an outcast since so many kids gave each other toys, but now it seems sensible. I invested much of the money I received from my wedding, and bought furniture with the rest (which isnt something most people give as a wedding gift).
Interesting post Xin. I wonder how much of the habits are inborn and what the impact of outside influences and public policy have been (for example communism, availability of financial systems/banks to the general population,corruption- which exists everywhere) — I can see howpossiblythe more prevalent use of cash and sharing of salary stems from those influences. It is interesting to learn about all, but those 2 strike me as the most dissimilar to my USA southern culture.
This was a very different perspective than you read on most blogs – I really liked it. This speaks volumes towards the potential for China to become an even bigger powerhouse in the future of global financial markets.
I was born in Taipei and moved to the United States when I was eight-months-old. Im only half-Chinese, but my mother taught me all the values you described. As I read your article, I sat here and thought thats me ~ thats me 🙂
These are good ideas but not practical in capitalism countries.
1. Decades before, most Chinese lived in small villages. Most small villages provided public kitchens, public TV rooms, public bathrooms, and public dining rooms. If there were no public facilities, families would shared kitchens, televisions, refrigerators, automobile, gardening tools and other household items. This was one reason why most Chinese believes the virtue of buy less and share more.
2. Decades before Communist China open its country to foreign investors; there werent efficient banking and saving systems and property rights were not existed. With no places to allocate their hard earned money, these issues forced most Chinese to save for themselves. Many put their money in tin cans, in cookies jars, under the beds, in bags behind closets and other hidden places.
3. With reason 2, this lead to reason 3 where it was possible and common for Chinese to buy properties and personal items with lump sum payment. As of today, I cant imagine people carry million of dollars in their backpacks. Walk around town with million of cash will gets government attention.
– Thanks for the posting and advices.
Yes it is so true about Italians giving money! My family always gives money for gifts-weddings are a biggie. Its so funny when I got married to my hubby, his family all gave us gifts and it was stuff I would never use in a million years and my family gave money. Actually enough to pay for the wedding and honeymoon.
My Step-Grandmother was visiting for the first time for Christmas and gave my son a card with $10. My In-laws kept asking him what he was going to spend it on and we all told him to save it. So far, so good he has saved it.
I am really trying to teach him to not spend his money gifts on foolish things and to save, save save.
Cool! I didnt know Italians gave cash gifts too. I married a Filipino guy and at our wedding we wrote on our invitation Red envelopes are always welcome so most of his family gave us checks and cash, too. It really wastes a lot less wrapping paper!
These habits are just as practical and useful in capitalist countries.
Saving doesnt mean you put your money in a cookie jar, it just means not spending your money. You can do that with modern banks just like you could do it before banks.
Same goes for sharing. Youd be surprised how much money sharing can save you. That applies to everything from sharing hardware to sharing car rides. The concept might be applied differently but its still the same basic ideas. Unless you use all of your resources 100% of the time, then you might find that sharing has great financial benefits.
I grew up in Israel, where most of these habits are also common place. I find them to be incredibly useful in my day to day life and in my financial planning.
I have to say I learn how to save and ignore useless stuff by hanging around foreigners.
I think the reason why its so hard for Americans to save is because of the media and TV of advertising things you think you need. Being constantly bombarded with advertisers its hard to stay discipline. America is a capitalist society so that can be good and bad.
Thats the way things were in Malaysia too, where I grew up. Its been 17 years since I left the old country so I dont know if those practices still remain. I hear credit cards are more common there now.
Were Jewish and most of our family gives money as gifts. For the holidays, sometimes we also get gift cards to stores that we frequent (Trader Joes is popular…everyone needs food). For our wedding, we got mostly money. The gifts came at the shower.
I dont like the idea of sharing salaries. Even our parents and siblings dont know our exact salaries!! Its no ones business, really. Occasionally we share this information with friends who might be in the same field as us, because its relevant, especially for companies that have pretty set salary tiers…its always nice to know what to expect in terms of salary if you switch companies.
To me, sharing salaries invites opinions and/or expectations, especially since we like to save and so many others like to spend. How many times have you heard someone gripe about feeling that someone is stingy on a gift or just doesnt like to spend their money? Just the other day I was reading an advice column with a woman (little sis) complaining about how generous shed been with her nephew, but her big sister gives inexpensive gifts even though big siss family is well off. So maybe the well off sister feels its more important to save, but shes judged for not giving expensive gifts, since the other sister deems her able to afford it. If little sis didnt know big siss salary, she might just assume thats all big sis could afford and then maybe even adjust her own giving accordingly, right?
My husbands coworkers used to call him moldy money because he wasnt in the habit of eating out at lunch (unless it was a birthday or special occasion) and he drove a 7 year old car. One of the higher ups atually commented, We pay you enough. Why dont you get a new car? even though his car only broke down once while working there and he had reliable back up transportation (my car) so it didnt interfere with his job duties.
It may be a sobering reminder that the ethnic minorities that are rated most wealthy in American capitalist society are: Jewish-, Japanese-, Polish-, Chinese-, Indian- and Italian-Americans, in that order. Look around the expensive neighborhoods and private clubs, or top academic institutions. All my interactions with these subcultures identify the above habits, and the Jewish to an even more disciplined focus. These are worldwide habits toward money that have made them targets of ridicule, and even persecution, but the accumulation of individual wealth when not hindered by a corrupt and repressive system.
HEALTHY TO BORDERLINE OBSESSIVE CONVERSATIONS ABOUT MONEY OVER TIGHT-KNIT FAMILY GATHERINGS. Many American subcultures find this crass but as young children, we are often told to earn pocket-money rather than accept
allowances, made to understand long-term investments and pay-offs (education in a profession, training, running a business,) discussing about property and real estate, and driven to compete with one another. Sometimes it could be funny, as Chinese people hoard those little ketchup packets or napkins by the drawer-full, but carefully choose a single big-ticket status symbol like a McMansion, haggled wisely of course. By junior high, I found that compared to most peers, my Chinese-American friends were more sophisticated in understanding tax breaks, deductibles, insurance benefits, refurbished items, and the value-added concept, even if they were studying to be professionals and not merchants. Its not cool but there you have it.
SWAP WITH FRIENDS, SELL IT HIGHER TO SOMEONE YOU DONT KNOW.
I had a neighbor whose parents indulged him with every new toy, whether or not we had the same thing. (My parents told us to invite him over often and share his toy.) Another neighbor who lavished snacks of every variety. (My parents made us plant fruit trees and eat from it…and then sell the extra fruits to the neighbors.) When we went to their friends home, we kids had to help wash their cars, hoe the garden, clean their home for free… and their kids helped us paint the fence, walk the dog, etc. With close friends, we traded board games, shared carpools, and swapped books to reduce our costs. With strangers, we sold what they wanted: sold sandwiches at school, sold ice-pops, sold recycled bottles. It took me twenty years to realize that in fact our house was the most expensive one on the block and my parents were well-off, it certainly didnt feel like it!!
NEVER OVERBURDEN YOUR CIRCLE OF TRUST, REAL MONEY COMES FROM OUTSIDE. Chinese modesty does not allow children to simply accept money from a family member without much protest, insistence that we do not deserve it, and an offer to reciprocate or pay-back the generosity with a promise to wisely put that money away for a real need. Borrowed money absolutely must be returned, sometimes with the concept of interest (though the lender-family/friend should be modest to wave away such a thought.) The idea is that legitimate money is earned not from parents/own friends but from the outside world. This seems ethnocentric, but it seems that Chinese culture is quite open to befriending those who have similar money habits (note: Jewish, Indian, etc.)
Theres rarely a traditional Chinese family that will not stress academic achievement, particularly competence in the sciences, engineering, and maths. Unlike convention, Chinese subculture sees its mastery as a product of discipline and dogged effort, not a inborn talent. Actually, besides a sharpened logic process, facility with numbers results in a culture that is more likely to tackle savings, complex tax break-downs, informed financial investments, and payback more shrewdly than the math flunk-out who never liked hard, real data to begin with.
…I guess its no surprise. A disproportionate number of us deftly find friends who share the same values. By my own admittance for the sake of this blog, my best friends will be Jewish-Russian, Jewish-Mexican, Japanese-Chinese, Indian, Polish-American… it just turned out this way.
PS. nowadays salary isnt as much of a casual conversation topic in the most capitalist zones of China, as the wealth gap becomes more apparent that info causes resentment or envy. Word gets around though. Within ones own family, however, it becomes a point of reference and competition marker.
Wow thats a long comment. I do have a Jewish friend who is way cheaper than me, and hes richer too. We do discuss salary and career and retirement issues. I know what you mean by this HEALTHY TO BORDERLINE OBSESSIVE CONVERSATIONS ABOUT MONEY OVER TIGHT-KNIT FAMILY GATHERINGS. My husband cant stand it when my parents and I talk about taxes and investments because he thinks its boring. My parents are accountants so money is sort of their job. There is also the competition thing, which can be quite annoying.
And it reminded me of my very Mexican-American mother who saves her money and–like her immigrant parents–almost always only pays in cash.
Taiwan, Korea, and Japan are all captialist societies and they all follow these 6 habits.
I do have a Jewish friend who is way cheaper than me, and hes richer too. (from comment 25)
Yes, and theres probably a direct correlation at work there!
Im not saying this is what you meant by this comment, but this comment did get me thinking…
Very often it seems like a person who has less money is critical of someone who has more money but is cheaper than them. They seem to think that since this person has more money, they should spend it more freely (and usually on the poorer friends & family). But the funny thing is, if they spent their money just as freely, they wouldnt have more money than you!
I just find it rather interesting that these people criticize rather than emulate. These people who feel poor and get resentful of their family/friends who have more dont seem to realize that there are still more Chinese or Jewish or whatever people out there who are making even less than they are but still manage to live below their means. For these oh poor me people, I think its an attitude thing…theyll never have enough to be satisfied. I think for people in some of these other cultures, where savings is promoted…were more likely to be grateful for what we have, better able to live within or below our means, and less prone to confusing needs and wants.
Many Asian countries share similar values about money, stemming from their shared Confucian teachings, which include thrift. Im Chinese American and was raised on such values.
Many Asian countries share similar values about money, stemming from their shared Confucian teachings, which include thrift. Im Chinese American and was raised on such values.
Thank you for posting this. My current sweetie is Chinese and she embraces A LOT of these values and views about money. Even when we hang out with her 2nd generation Asian friends… theyre talking about saving/spending money and investments. All the time!!!
I live in a multi-cultural neighborhood, and work in an extremely diverse office. My immediate neighbors, and the ones I have the closest relationships with are Chinese immigrants and Chinese-Americans. I noticed that they work hard, save money, and get by on living below their means. I give their children and grandchildren red envelopes during Ginger and Egg parties, birthdays, and Chinese New Year. On the other hand my recent immigrant Chinese co-workers (we all work in IT) earn more money than my neighbors, and they spend money much more frequently than I and my neighbors do. I also noticed that they are very brand conscious, and will spend more money on a sale item because of the label. For example, my closest co-worker told me how she went to Macys at lunch to buy 3 Ralph Lauren shirts for $49 each to send back home to her brother in China. Another co-work purchased $700 worth of make-up to give to his sister-in-law for his trip back to China. The reason they gave for doing this is, because the same items cost more in China. (They buy these brands for themselves, too, and say that its not considered good quality unless there is a well publicized name on the product). Many Mondays, they will talk about how they got such a great bargain at an outlet or department store. I am pretty sure they pay the bill off every month, but to me that is ridiculous!
My husband is from a small Caribbean island, and almost everything has be to imported, and thus costs are higher than here in the States. When we go down there or send stuff, I visit the local Dollar Tree, and spend about $300 liquid cleaners, lotion, toothpaste, shampoo, etc. The household items I get will last for at least a year for our numerous relatives, and they dont care what brand it is just as long as the stuff works! Very similarly to Chinese culture, Caribbean people save large portions of their income
, and pay for most homes and cars with cash. Except for my teenage relatives, I have never received a request for a named brand item, and they dont turn up their noses to generic goods, or question an items quality.
By the way, the two co-workers I mentioned are my best friends at work, and they often tease me about my frugality. Often, they say I act very Chinese (I am Black) with my money, and tell me that I should just buy an item when we discuss my dilemma over some purchase decisions. My point is that many cultures instill frugality and good money management, but there are several factions from within those same cultures that are significant driving forces within the consumerist economy.
This is a very interesting post. Im an American and have moved to Hong Kong for business about 2 years ago. One of the really interesting things you mentioned is the open talk about your income and finances. This is not true amongst Indians but I have found it to be completely true amongst the Chinese and other East Asians. At first I thought it was a bit rude, obviously in America it is considered rude to ask someone what they make, or how much they paid for their home, or what they have in savings, etc. However I have come to learn just how much better it is out here with people being open about such things. In the States we dont talk about these things and on a personal level we have the worst finances amongst the developed world. In America over 75% of people live paycheck to paycheck or very close to that. Perhaps if people talked more about their money theyd be more conscious of being responsible with it. It is also true as you said that people here talk about money not to brag about it but really to just inform and discuss, maybe offer advice. The same as we might talk about our diets in America.
However, I do think there is a major cultural shift happening here as well. Because Asia is becoming so wealthy the divide between the rich and everyone else is becoming bigger and bigger. Consumerism is becoming a big thing. People do like to show off with the million dollar apartments and six-figure cars. Especially here in Hong Kong and down in Singapore which has more millionaires per capita than anywhere else in the world.
Its also worth noting that Asian-Americans are the wealthiest group of people of people in American when broken down by race/ethnicity. In terms of both net worth and income. The median income for an Asian American is over $70k while for caucasians it is under $50k – a very big difference.
I lived in China from 2004-2006, and from what I saw there, your list still applies. Plus, of course, the plethora of knockoff products at various street markets made 4 easy!
I spent some time in Asia and saw a lot of the same behavior you describe. I have to admit ignorance in that I used to stereotype Asians as greedy but over the years ive come to realize that the culture places a high value on common sense.
I come from the Philippines where Chinese are now economically dominant and thus all-too-often the object of much envy and resentment.
Money matters: Theres always fear of social or business repercussions or embarrassment to you or the other person when discussing money with non-family members. Its viewed as a private matter.
Filipino ideal traits of hospitality, generosity, and a work to live (and enjoy!) attitude often produce an environment which does not encourage those habits.
Co-workers who rarely attend company parties or refuse to throw birthday bashes eventually earn a reputation as a cheapskate and becomes the running joke when such occasion come. People who win a contest are cajoled into sharing some of the prize and people who got promoted are joked into giving a treat. People whod rather work or spend time alone would be considered as people who dont know how to relax, worse, told that you cant bring your riches to the grave, etc. In typical Filipino fashion, the proper response to these jokes, or attitudes, is to joke back. Parents and housewives take pride in their ability to provide the best for their children and be excellent hosts at the same time.
For me, no wonder many find that being an overseas worker is necessary for some for a comfortable life here. Too much social baggage and status to maintain.
I hope at least some of these good habits such as these rub off on the general population here and diminish the stereotypes on Chinese (and Filipinos who dont fit the mold) here.
Hey there, my husband is actually Filipino. Youre right about the difference, though. Filipinos do see money as a private matter and having lots of parties and giving lots of random gifts is encouraged. I am not really used to that yet because I never had a huge family before. I think Filipinos are more westernized because of a heavy Spanish/Catholic influence so they are sort of different from the Chinese. My in-laws are sorta more spendy than my parents, too. Its pretty interesting, but we get along pretty well.
1. Piggy Banking (Best Habit) – Make it a habit to put atleast $2 in the piggy bank everyday. If you are concerned about how to implant this habit Thumb rule says, repeat the action for 21 days consecutively and it will result into a habit
2. Lend it as an expense Whenever you friends/relatives need money, lend it to them and psychologically consider it as an exp