The Chinese Secret to Saving Money Revealed

Summary

This video uncovers the Chinese secret to saving money, influenced by cultural values and historical factors. The speaker, who is 100% Chinese, highlights that China's gross savings rate is significantly higher than the U.S., attributing this to a cultural emphasis on saving and aversion to debt. The video explains the importance of money in Chinese society, the impact of the one-child policy on savings, and the lack of retirement accounts, which prompts individuals to save for their future. The main secret to Chinese saving prowess is meticulous budgeting, where every dollar is accounted for using the zero-based budgeting system. The speaker also outlines four key factors prioritized by the Chinese to save money: avoiding luxury goods, living off a small percentage of income, distinguishing between needs and wants, and eating at home to cut costs. The video concludes with a New Year's wish of prosperity, encouraging viewers to adopt these saving habits.

Takeaways

• 🇨🇳 High Savings Rate: The Chinese have a high gross savings rate of 45.9% as of December 2021, compared to the United States' 3.5-5%.
• 🧧 Cultural Significance: In Chinese culture, saving money is considered honorable, and children are taught this from a young age, often receiving 'lucky money' during holidays.
• 🎉 Greetings and Wealth: During Chinese New Year, a common greeting is 'Gong Xi Fa Cai' which translates to 'Wish you get rich', highlighting the importance of wealth.
• 👶 One-Child Policy Impact: The one-child policy in China led to a focus on saving as families had fewer children to support, and males had to appear successful to be desirable.
• 💼 Aversion to Debt: Chinese people often prefer to pay in full for items in cash rather than financing, which reduces debt.
• 👵👴 Pension System Concerns: Many Chinese are wary of the pension system and save for healthcare, education, and their own retirement.
• 💰 Zero-Based Budgeting: The Chinese practice a budgeting system where every dollar is accounted for, aiming to have zero dollars left at the end of the month.
• 🛍️ Avoiding Luxury Goods: Chinese people tend to avoid luxury goods and status symbols, preferring to stay humble and save money.
• 🏡 Living Off a Small Percentage: Many Chinese people live off a small percentage of their income, saving the rest as a habit formed from frugal beginnings.
• 🔄 Needs vs Wants: Chinese culture emphasizes spending on needs and being frugal with wants, ensuring value for money spent.
• 🍲 Eating at Home: The Chinese advise saving money by eating at home more often, which is a common practice to reduce food expenses.

Q & A

What is the gross savings rate in China as of December 2021?

The gross savings rate in China as of December 2021 is 45.9 percent, meaning for every hundred dollars they bring in, they save roughly 46 dollars.

How does the savings rate in the United States compare to China's?

The savings rate in the United States is typically between 3.5 and 5 percent, which is significantly lower than China's rate.

What cultural factors contribute to the Chinese being good at saving money?

Cultural factors include a heavy emphasis on saving money, aversion to financing and taking on debt, and the importance of money in Chinese society.

What is the significance of the red envelopes given to children in China?

Red envelopes given to children, often containing money for New Year's and birthdays, are referred to as lucky money and are a way to encourage saving from an early age.

How does the Chinese New Year greeting differ from the common 'Happy New Year'?

Instead of saying 'Happy New Year', Chinese people often say 'Gong Xi Fa Cai' which translates to 'Hope you get rich', highlighting the importance of wealth in their culture.

What was the impact of China's one-child policy on savings behavior?

The one-child policy led to families having fewer children to support financially, allowing them to save more money, and created a social pressure for males to be successful, often equated with wealth.

What is the zero-based budgeting system mentioned in the script?

The zero-based budgeting system is a method where every cent of monthly income is accounted for in a budget, with the goal of having zero dollars left at the end of the month after expenses and savings.

Why do Chinese people often avoid luxury goods and status symbols?

Chinese people tend to value humility and avoiding ostentatious displays of wealth, preferring to stay under the radar and not indulge in luxury goods.

What principle did the speaker's father adopt from his childhood experiences in Shanghai?

The speaker's father adopted the principle of trying to live off a very small percentage of his income, stemming from his tough childhood where he often went hungry.

What advice do the Chinese give regarding the distinction between needs and wants when it comes to spending?

The Chinese advise focusing on needs over wants, spending money on necessary items, especially those related to health, and ensuring value when purchasing items of desire.

What is the recommended strategy for saving money quickly according to the Chinese?

The Chinese recommend staying at home and eating at home to save money quickly, as eating out is generally more expensive than preparing meals at home.