Dian's Column
Dian's Archive

Lavine/Liberman Archive




Lipper
Muriel Siebert & Co.



The Chinese can teach us a thing or two about saving money



By Dian Vujovich

If you’ve ever wondered why the Chinese seem to have made so many great strides economically lately, one reason might be because people in that country value saving money. What a concept!

This week, research from the University of Missouri’s College of Human Environment Sciences reported that urban Chinese households save way more than American households do.

Why is that? Researcher Rui Yao said it’s because of a difference in saving motives.

“Saving is one of the critical tools that households utilize to achieve financial goals and to improve financial well-being,” says Yao.

Yao looked at three solid reasons for saving money: precautionary, as in our notion of rainy day funds, education and retirement. In her research Yao looked at results for the American 2007 Survey of Consumer Finances and the 2008 Survey of Chinese Consumer Finance and Investor Education and found:

•While roughly 60 percent of Chinese households save for precautionary reasons, only 35 percent of American households do.

• Only 19 percent of Americans save for education while saving 59 percent of Chinese urban households save for things like their kid’s college tuition.

• Regarding retirement savings, low income Chinese households save more than low income US ones. Move up the economic ladder, however, and their isn’t much difference in savings similarities between residents in the two countries.

“In the U.S., unemployment insurance and other welfare programs provide a relatively sound safety net, whereas in China, there are no such social-welfare programs,” Yao said. “As a result, Chinese households must resort to family support or previous savings in the case of an emergency. Also, the Chinese culture, which is influenced by Confucianism, values education very highly. Recent Chinese economic reforms have shifted education costs to households, which gives them additional motive for education saving.”

Bottom line: No matter where you live—America or China—saving money is Rule No.1 in having money.


To read more articles, please visit the column archive.




[ top ]