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.

Outlines

00:00

💰 The Chinese Approach to Saving Money

This paragraph introduces the video's focus on the Chinese secret to saving money, highlighting the cultural and historical reasons behind the high savings rate in China compared to the United States. The speaker shares personal connections to China and emphasizes the stark contrast between the Chinese savings rate of 45.9% and the U.S. rate of 3.5% to 5%. The cultural emphasis on saving in China is contrasted with the American focus on consumption, which has its roots in post-World War II efforts to stimulate the economy. The speaker also touches on the demographic factors and the aversion to debt in Chinese culture as contributing factors to their saving habits.

05:00

🧧 Cultural Significance and Demographics Influencing Chinese Saving Habits

The second paragraph delves deeper into the cultural significance of money in China, where it is considered honorable to save from a young age, with children receiving 'lucky money' in red envelopes during holidays and birthdays. The video mentions a traditional Chinese New Year greeting that emphasizes wealth over happiness, indicating the value placed on financial success. The paragraph also discusses the impact of the one-child policy on savings, as it led to a decrease in the number of children per family and an increase in sex-selective abortions due to the preference for boys. This policy inadvertently encouraged saving as families had fewer children to support financially, and it also created a competitive environment for men to be seen as successful, often equated with wealth.

10:02

📊 The Zero-Based Budgeting System and Chinese Saving Strategies

In the final paragraph, the speaker reveals the main secret behind Chinese saving prowess: the zero-based budgeting system. This system involves meticulously budgeting every cent of monthly income so that the remainder at the end of the month is zero. The speaker provides an example of how to implement this system, emphasizing the importance of accounting for all expenses, including savings and investments. Additionally, four main factors that Chinese people prioritize to save money are introduced: avoiding luxury goods, living off a small percentage of income, distinguishing between needs and wants, and the preference for eating and staying at home to save on costs. The speaker concludes with a call to action for viewers to consider these strategies in their own lives and to subscribe to a newsletter for more economic and business insights.

Keywords

💡Saving Money

Saving money refers to the practice of setting aside a portion of one's income for future use rather than spending it all on immediate consumption. In the context of the video, it is the central theme as the speaker discusses the cultural habits and strategies that Chinese people use to save a significant portion of their income, contrasting it with the higher consumption rates in the United States.

💡Cultural Influence

Cultural influence pertains to the impact that a society's customs, values, and beliefs have on the behavior of its members. The video highlights how Chinese culture places a strong emphasis on saving money, which is seen as honorable and is instilled from a young age, as opposed to the American culture that encourages consumption and keeping up with others.

💡Gross Savings Rate

Gross savings rate is the total amount of money saved by households within an economy as a percentage of the country's GDP. The video script mentions that China's gross savings rate is significantly higher than that of the United States, illustrating the disparity in saving habits between the two countries.

💡Zero-Based Budgeting

Zero-Based Budgeting is a financial management technique where every dollar of income is accounted for, with the goal of having zero dollars left unallocated at the end of the budgeting period. The video describes this system as a key method used by Chinese individuals to ensure that all of their income is allocated towards expenses, savings, and investments, which contributes to their high savings rate.

💡One Child Policy

The One Child Policy was a population control measure implemented by the Chinese government from the late 1970s to 2015, which limited most urban couples to have only one child. The video explains how this policy influenced savings behavior, as families had fewer children to support financially, allowing them to save more.

💡Luxury Goods

Luxury goods are products or services of high quality and high price, often associated with status and wealth. The script mentions that Chinese people tend to avoid indulging in luxury goods as a means to save money and maintain a humble lifestyle.

💡Status Symbols

Status symbols are items or possessions that are used to indicate a person's social or economic status. The video discusses how Chinese culture discourages the use of luxury goods as status symbols, which helps individuals to save money by not feeling the pressure to keep up with others.

💡Pension System

A pension system is a government- or employer-sponsored plan that provides retirement income to workers. The video mentions that in China, there is a pension system, but many people are wary of its reliability, leading them to save more for their own retirement and healthcare costs.

💡Humble

Humble refers to the quality of having or showing a modest or low estimate of one's importance. The video script notes that Chinese people often prefer to stay humble and not flaunt their wealth, which is reflected in their avoidance of luxury goods and focus on saving.

💡Scarcity Mindset

Scarcity mindset is a psychological state where individuals perceive resources as limited and feel a constant need to hoard or save. The video describes how the experience of poverty in the past has led some Chinese people to adopt a scarcity mindset, which influences their saving habits.

💡Frugality

Frugality is the quality of being economical with money or resources. The video emphasizes the importance of frugality in Chinese culture, where people are advised to focus on their needs over their wants and to live off a small percentage of their income to save the rest.

Highlights

The Chinese secret to saving money is rooted in cultural practices and a high gross savings rate of 45.9% as of December 2021.

Contrasting with the U.S. savings rate between 3.5% and 5%, the Chinese have a strong emphasis on saving money.

Cultural influences in America post-World War II encouraged consumption, unlike China's focus on saving.

Chinese people often prefer to buy things in full cash to avoid debt and financing.

The meaning of money in Chinese culture is deeply ingrained from childhood, with saving considered honorable.

Red envelopes with 'lucky money' are given to children during holidays and birthdays, encouraging saving.

The phrase used during Chinese New Year, 'Gong Xi Fa Cai', translates to 'Hope you get rich', highlighting the value of wealth.

The one-child policy in China led to a decline in newborns and an increased focus on saving for the single child's future.

The preference for male children in China has led to a skewed population and a higher value placed on success and wealth.

Chinese people's skepticism about the pension system drives them to save for healthcare, education, and retirement.

The zero-based budgeting system is a method used by Chinese people to account for every dollar of their monthly income.

Chinese people prioritize not indulging in luxury goods and focus on staying humble and avoiding status symbols.

Many Chinese people live off a small percentage of their income, stemming from a mentality of saving to avoid past hardships.

Focusing on needs versus wants is a key strategy for saving money, with an emphasis on making smart and frugal choices.

The advice for quick savings is to stay at home and eat at home, reducing the costs associated with eating out.

The video concludes with a New Year's greeting, 'Gong Xi Fa Cai', symbolizing the wish for wealth and prosperity.

Transcripts

in this video I'm going to reveal the

Chinese secret to saving money now I've

gotten a lot of these money saving tips

from my dad who's your typical good with

money Chinese person and I want to share

with you those today people sometimes

will ask me if I'm half asian but I'm

actually 100 Chinese and my mom is from

Beijing my dad is from Shanghai and I've

done many trips to China including two

six-month stretches both in Hong Kong

and in Beijing and many trips in between

so sit back nihaw women's

the most stunning fact about the Chinese

is that in China the gross savings rate

there is 45.9 percent as of December

2021 that means on every hundred dollars

that they bring in they're going to be

saving roughly 46 dollars of that

contrast that to the United States where

we have a heavy focus on consumption in

this country our savings rate is

typically between 3.5 and 5 according to

the data so what's the reason for this

big disparity I mean that's almost a

factor of 10 that we're talking about

here so why are the Chinese so good at

saving money first it's definitely

cultural us As Americans we're always

being hit with sales disc accounts

financing options and the like 80 off

clothes come on in and I'll give you a

free quote and we're always kind of

pressured to keep up with our neighbors

is this car fifteen thousand dollars

yeah it is now a lot of this originated

After the post-world War II era it was

not long after the Great Depression and

it was deemed patriotic if you were

actually to consume in America at that

time and so they were trying to spur the

economy on and I encourage you all to go

shopping more in China it's very

different they have a heavy emphasis on

saving money because of what money means

to them as well as the demographics of

their country you'll also find a heavy

aversion to financing things in China

oftentimes Chinese people want to buy

things full in cash instead of trying to

finance it and take on debt now if

you're just looking for the Chinese

secret to saving money I'm Gonna Leave a

timestamp down below so that you can

just skip to it if you want however

right now I'm going to cover the why as

to why Chinese people save money because

I think it's really interesting and if

you if you understand intrinsically why

Chinese people want to save money it can

help you save money as well so the first

reason reason why Chinese people like to

save money is the meaning of money and

what it means to them so as kids you're

taught from a very early age that saving

money is Honorable kids will often get

money in these red envelopes for New

Year's and birthdays and they are often

encouraged by their parents to save it

this money is referred to as lucky money

now money is so important to the Chinese

that they even have a phrase during the

holidays and new years that they say

instead of happy New Year they say

something else let's listen to Ronnie

Chang the comedian explain it better

than I can even during Chinese New Year

the biggest holiday for Chinese people

Chinese New Year when we see each other

during Chinese New Year the way we greet

each other

is we say

in Cantonese I'm sure you've heard that

at least perfectly right

means hope you get rich

[Applause]

that's not

happy

that's pretty funny because it's also

true you can also see the importance of

money in the way that people in Chinese

Society treat other people with a lot of

money people with a lot of money in

Chinese culture are deemed successful in

many people's eyes and so it's often

viewed as a good thing to have a lot of

money now being successful also has its

other perks in China and that actually

brings me to my next point which is

demographics up until 2016 China

actually had a one child policy that was

implemented in the late 70s and early

80s to kind of stem overpopulation and

that means each family could have one

child so now if you had more than one

child you would just be slapped with a

fine and in addition if you didn't pay

that fine your household would not be

able to register your second child's

name in the household system so your

second child would not be eligible for

health care services and other services

like education so naturally this one

child policy created a sharp decline in

newborns as you can see by this graph

but also in sex selective abortions in

China it's usually much more important

to have a boy than a girl because the

boy usually inherits the family name as

well as the property so what you had was

a lot of people kind of using

contraception in a way that they would

avoid female bursts and try to optimize

for mail bursts and with that

contraception actually it skewed the

population having more males than

females over time so at its worst it was

122 males for every 100 females that

were born now in general terms if you

have more men than women than you have a

supply and demand issue right so there's

more men chasing the same amount of

women so basically to stand out as a man

in China you have to be viewed as

successful AKA you probably have a lot

of money the other thing with the one

child policy was that since families

were only having one child they weren't

having multiple kids in the majority of

cases that means that the parents could

save more money because they didn't have

multiple kids to feed so you kind of had

a double whammy with the one child

policy you had parents not having to

spend as much money and then the males

trying to save as much money to become

desirable another reason for saving in

China is that there's no 401K there's no

Ira there's no retirement accounts that

Chinese people can contribute to rather

they do have what's called a pension

system but still many people in China

are wary that the pension system will

still be around when they retire and so

they also worry about the cost of

healthcare education and their own

pensions so these are some of the main

intrinsic reasons as to why Chinese

people like to save money but let's

actually talk about the money secret of

this video the main secret as to why

Chinese people are brilliant at saving

money it's not anything crazy it's just

that they have every dollar accounted

for in my particular case my dad would

always know where his money was going at

all times and there is a special

budgeting system that can help you with

this and in America and in the Western

countries it's called the zero-based

budgeting system the zero-based

budgeting system is a method in which

you budget where you spend every last

cent of your monthly income so that your

amount left at the end of every month is

equal to zero so that means your income

minus your expenses equals zero at the

end of the month now expenses in this

case also includes savings Investments

paying off debt Etc let's pretend you

make four thousand dollars a month a

zero-based budget might look like the

following you have your rents your

groceries your Necessities all listed

right here but then you also have a

section for the things that you're

saving for your emergency fund your IRA

your student loan payments new car fund

and then any other savings that you

might want to do you can see by the time

that you get to the end of your

budgeting you are left with zero dollars

at the bottom right here this is

essentially the zero based budgeting

system where all dollars are accounted

for you can easily do this budgeting

system at home but it also means that

you have to be super honest with your

own expenses and sometimes you might

have to do this for three months to get

an average of all your variable expenses

throughout the three months if you've

watched some of my videos before you

should know that this budgeting system

doesn't exactly tell you how much you

should spend for every single category

rather it kind of helps you understand

your expenses as a whole including your

fixed expenses and then you can kind of

categorize your expenses and allocate

your budget from there all right there

are four main factors that the Chinese

prioritize to help them save a lot of

money that I want to tell you about

before we do that though make sure to

drop this video a like and if you enjoy

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guys in the newsletter as well all right

so the first of the four main factors

that the Chinese do to help them save

money is that they don't indulge in

luxury goods or Goods that are just

there as status symbols the majority of

Chinese people want to stay humble and

they also want to fly under the radar so

they usually stay away from these luxury

products number two when the Chinese

earn money they usually like to live off

a very small percentage of their income

now my dad grew up with very little

money as a child in Shanghai there were

some days that he could not even afford

food and he would go to sleep hungry

when he was able to afford food all he

could really buy at the time was a plain

pastry called the manto and amanto is a

tasteless kind of white bun that you can

buy for very cheap because of this tough

childhood when my dad started his career

whenever he earned let's say ten dollars

he tried to live off of one single

dollar now in reality was he able to

live off of one dollar for every ten

dollars that he earned not really there

were going to be times that he had to

spend six seven eight or nine out of

those ten dollars just to make ends meet

for him though saving money wasn't a way

to build wealth it was actually a way to

ensure that he never had to sleep hungry

again so this simple principle of trying

to save as much money as you can and

live off of little as possible really

stuck with me and it's one of the main

factors that I think many other Chinese

people adopt as well now this is a good

rule if you're trying to build wealth

But please understand that this type of

rule will create what's called a

scarcity mindset about money and so you

kind of have to acknowledge that

psychologically that as you earn more

money you can kind of switch your

mindset into more of an abundance

mindset later on the third factor that

the Chinese employ to save a lot of

money is that they really focus on their

needs versus their wants so another Wise

lesson from them is that if you need

something and you have to actually spend

money on something you need then go

ahead and spend money especially if it

pertains to your health so if you're

debating between a flimsy desk chair or

an ergonomic chair that might be able to

make you more comfortable and stay

healthier throughout the day you might

want to opt for that ergonomic chair I

would classify the ergonomic chair as a

need within reason of course you don't

want to take this logic to the most

extreme for example everyone needs

clothes but that doesn't mean you need

to go buy Gucci clothes just because

they are better because it's a need so

here the idea is to be reasonable with

your spending and make smart choices and

save where you can now when it comes to

wants you can still buy something that

you want but make sure that you're going

to get really good value out of that so

what do I mean by that let's say you buy

a 350 dollar fancy wallet like let's say

you just really wanted this well you

want to make sure that you can use that

wallet for a very long time so that it

amortizes the cost of your use could you

use that wallet for five years then that

means you would take that 350 dollars

and spread it out over five years of

usage that comes out to less than 20

cents a day spending money is inevitable

everybody will have to spend money at

some point but the lesson here is to be

reasonable and Frugal with most of your

decisions the last Factor here is that

if you're trying to save money very

quickly the Chinese would advise you to

stay at home and eat at home now we have

food at home food at home

I think this one is pretty Universal to

most cultures we know that by eating out

we're spending a lot more money on food

than we need to and in my household I

remember growing up and we would maybe

go out to eat once every other week

usually having people over to have a

group dinner was more of a common place

and so that was our way of socializing

as a family growing up and the eating

out was just mostly saved for special

occasions I hope some of these tips will

inspire you to save if they did please

let me know in the comments and as the

Chinese would say during New Year's gong

XI fatsai which means I hope you get

rich make sure to check out my

newsletter hump days and I'll see you

guys in the next video peace