What is my purpose for this website? To get you to enhance your money saving strategies by giving you savings tips, behavioral advice, facts about investing, and how to take advantage of the time right now to begin to save. I recently read an article in Bloomberg BusinessWeek magazine, which stated how the people in China on average are very frugal. Oh this topic has been brought up before and records show that over the past few decades Asian people tend to save more than people here in the U.S. What I wanted to show you today is about how this information about frugality delves deeper than what is on the surface about frugality. The title of the piece is called “The trouble with Chinese Frugality”, and I have a real concern as to why it is stated as a negative instead of a positive for Chinese people. Then it struck me as I began reading, that this article is based on spurring the economy by consumers spending more and that is why the title is referenced in that matter. They want China to be like the United States where 70% of the GDP is fueled by consumer spending. Consumer spending in China contributes only about 30-40% of GDP, so why is the reporter trying to convince us that our economy is better than there economy. I do not know which system is best, but signs are clear that expecting your citizens to spend in order to fuel revenue for the country might not be good.
When is it ever good to tell people to overextend themselves for the sake of helping the government and the economy? I think the answer is never, because there will always be an issue with the savings rate, if you save too little or if you save too much. People who write these columns should see that in order to spur the economy, it doesn’t come from people overextending their wallets, it comes from job creation, increases in wages by corporations, competition by corporations to increase demand, and other macroeconomic based activities. The savings rate of john smith should not have any effect on the economy. (But with the current system it does) If you spend you help the economy, but at the same time to the detriment of your future needs!
So now I will ask you to take a lesson from these super savers and it’s time to flex the frugality muscle. Since 1996 Chinese citizens (on average) have saved from 15% to currently 30.1% percent of total annual income. I know this can be hard to fathom since very few people in America can actually save 15% of their pay, but I say if they can do it so can you. In over 60 plus years Americans have never surpassed 15% personal savings rate, and the Chinese have been saving 15% + since 1996. Is it a social economical issue we have here or maybe they are not being constantly bombarded with marketing ads like here in America? Whatever the issue is on a macro level, I think everybody’s spending situation can be adjusted to allow a little bit more money to go to savings. Now with that being said, will you try to catch up to at least reach closer to fellow Asian person’s effective savings abilities? This is a good short term exercise to get you to live within your means, by practicing savings strategies. I know you will not regret trying to play catch up savings, because at the end of the day you are saving for your future you. Time to Flex the Frugality Muscle!
U.S. Personal Savings Rate
| Chinese Personal Savings Rate
| ||||
|
|
Resource Info:
Bloomberg BusinessWeek Magazine
Comment if you can cut something right now to increase your personal savings rate and flex the frugality muscle?
Rich Uncle EL
Picture by Ambro / Freedigitalphotos.net
