My amazing wife is from China and came over to the United States where we met in College. I have learned much from her about Chinese perspectives on money and finance! There are interesting money concept differences between Chinese and American societies.
Coming from an international marriage, I’ve seen benefits from understanding other cultures’ viewpoints on money. I hope this blog post can help open your mind and give you added insights on gaining control of your finances.
In this article, I will discuss the 11 key differences between Chinese and American views on finance and money management. Of course, the differences mentioned come from the majority of each population. It does not mean everyone from a particular country has the same perspectives or habits toward money.
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Table of Contents
1) Concepts of Spending Money & Frugality
Let’s talk about American vs. Chinese spending money views and habits. Of course, this is generally speaking since many individuals have varying views and habits with money, regardless of where they were born.
In China, frugality is a concept that has been taught for thousands of years. There are even many ancient books that teach about frugality! So having a frugal mindset and behavior is an integral part of Chinese culture.
In China, frugality is a virtue. Therefore, frugal people are praised, and spending money is criticized.
To be completely honest, when my wife and I married, she was in charge of the money. I learned valuable money lessons from her and broke many lousy spending habits.
In America, spending and customer debt are heavily marketed and even praised. I am grateful that I learned the value of saving and investing.
2) Attitude on Putting Money Towards Savings
Many Chinese people love to save as much as possible and be prepared for a rainy day, AKA having an emergency fund.
China’s personal savings rate is surprisingly high compared to the United States.
According to QUARTZ – The Chinese people’s saving rate is 45.2%, but the Americans only 18.3%. So, the Chinese have a 26.9% higher money-saving rate than Americans.
A large percentage of Americans spend too much money on wants and, unfortunately, end up in a heap of debt. So it’s essential to have a positive attitude towards saving and exercising self-discipline when spending money.
3) Chinese vs. American: Split the Bill or No?
In the United States, we typically split the bill when going out to dinner with friends, and family, and this happened when I started dating my now-wife. This is simply not the Chinese way.
My Chinese in-laws would pay for basically everything when we went out to dinner or activities.
After Chinese kids have grown up and established a solid financial foundation, they will start paying for these types of expenses, so the Parents don’t need to anymore. Children will also frequently give money to their parents during holidays and birthdays to show respect and gratitude for all they have done.
In America, it is common to split the bill. This is not seen as disrespectful but is an easy way for both individuals to pay their own and not owe the other person(s) anything.
4) Different Perspectives on Debt
Credit cards are rare in China; most people pay cash for everything. When Chinese students graduate, they also don’t have student debt because their parents typically will pay for tuition and living expenses.
On the other hand, countless Americans have a lot of debt like student loans, credit cards, etc. I used to be in that group until I decided to get out of debt.
Our family right now doesn’t have any loans except mortgages. Through hard work and discipline, I graduated student debt free with my MBA.
Getting out of debt was challenging, but debt-free feels terrific!
The Chinese are wary of debt, which is a good thing.
5) Negotiating and Bargaining
In the USA, we do not negotiate or bargain a lot in society. China is an entirely different world in this regard.
My wife Shan told me we should always look for bargains in China. Bargaining is a way of life in China.
For example, if you go to the food market daily to buy vegetables, proteins, fruits, etc., you will bargain with the food seller.
If you want to travel to China or do business with the Chinese, like buying items from a Chinese factory, make sure to negotiate!
Locals charge a higher price when they see foreigners. They do this because they think you are rich and don’t understand the Chinese market.
My wife taught me these Chinese bargaining tips:
- No matter how much you like the product, don’t show it! Instead, tell the seller your ideal price (a little lower than the price you want). If the seller disagrees, you say no and start to leave. Most of the time, the seller will give you a lower price when they see you are leaving.
- Shop around; there are a lot of shops selling similar things in China, whether physical or online. If one shop doesn’t work out, check out other shops to find the same thing or something similar.
Remember, bargaining is the Chinese way! So don’t be shy to negotiate a lower price, especially if you are paying with cash.
6) Openness When Discussing Money
People in China are very open to discussing money and financial situations.
In the United States, we tend to keep our finances private and don’t openly share our salary, house values, investments, etc.
The Chinese are very open when talking about money. People will talk about which stocks they traded recently and how much they bought their houses for, and your salary is also not a secret.
If you ask a Chinese person in China how much they make, they will likely tell you.
In Chinese culture, talking about money is not impolite, and sometimes there are benefits because you can learn from each other.
In the United States, these financial topics are relatively private. People generally do not ask or ask very carefully. The other person may refuse to tell you or be offended. Being a highly individualistic culture, there is a lot of status and judgment when discussing careers and money.
7) Collectivism vs. Individualism
In American society, many children must be independent when they are 18. For example, most American kids need to pay their college tuition and care for their expenses.
When you live in your parents’ house, sometimes you must also pay rent. This is because the United States culture is very individualistic. There is more freedom but also typically less help financially from others. See the chart below from Hofstede Insights to see how different the US ranks in individualism versus China.
While attending college, my wife was shocked to hear her roommate say, “My parents told me to take everything in their house to my own apartment because my apartment is my own home.”
Much of the elderly population in the USA live in a senior center and care for themselves, but this is not common practice for Chinese people with a collectivist culture.
My father-in-law once explained that no matter how old his daughter was, she was still her kid and needed to be looked after. Chinese parents will help pay for their children’s college tuition, buy a car and house, and even help raise the next generation.
It’s also common to see multi-generational families living in the same house. My wife told me that her grandma and aunts helped my mother-in-law raise my wife when she was little. When Chinese parents are old, Chinese children will also care for them. That’s why you can see three generations living together in China.
For example, my wife’s grandmother lives with her son and grandson instead of a Senior Living Center. This is a very common practice in China.
There are pros and cons to each side: collectivism and individualism. My wife tells me how being in such a highly collective culture, there is not a lot of ‘freedom.’ Although having good intentions, Chines parents frequently supervise what children do into adulthood and are not shy to give pressure and feedback.
8) Who pays for the wedding?
The groom’s family will pay for the wedding and honeymoon in China. In the USA, the bride’s parents usually pay for the wedding.
I am very touched that my Chinese parents understood our American culture, so they didn’t get mad when we were preparing for the wedding. My wife and I had a simple wedding, and both parents helped pay for it.
We also had a very different honeymoon, lol. My Chinese in-laws came from China to the USA for our wedding, so we couldn’t just leave them alone while we left on our honeymoon.
They also don’t speak English, so we took them on our honeymoon trip to California. It was actually a lot of fun! They also paid for the cost, which helped us save money on our first house downpayment. Check out some of our honeymoon photos below:
9) Cash as Gifts or Not
In China, adults will put cash in a red envelope, and Chinese people call it lucky money (Hong Bao). Every New Year or birthday, Chinese kids usually receive lucky money as their gifts.
Lucky money is a traditional gift for any celebration. The recipient can do anything with the money too.
Since Chinese children receive cash, their parents will teach them not to spend indiscriminately and to save extra money.
It is a fantastic finance lesson for children to learn how to save and manage money. Cash gifts seem less common in the U.S. Usually, Americans give a real gift or gift card.
After being with my wife, I have also become more likely to accept cash as a gift (or a gift card because we are in the U.S.) or to give cash to others because sometimes you give things that others may not need or like, but if you give cash, people can use that money to do what they want.
10) Food and Money
Food is a very central aspect to Chinese culture and customs.
In the United States, when we say hi, we will say: how are you?
But in China, they will say: “Have you eaten?’
My Chinese in-laws always say, “you can save everything in your life, but don’t save money on food.”
When I travel with my wife, she is also very focused on finding local delicacies. There is an emphasis not just on money, but how long it takes to cook the food, with longer cooked foods tasting even better!
My wife and her Chinese friends here say they prefer American food because it’s quick and easy, but Chinese food takes a long time. America has a reputation for fast cuisine, which has benefits but may lack in taste or nutrition.
11) College Tuition and Expenses
The last thing I want to talk about regarding American vs. Chinese money views is paying for College out of pocket or not.
Chinese people care very much about education. There is a saying in China that “Education can change your destiny.”
My wife’s parents told her she did not need to worry about tuition if she could attend a good college. They can even sell their own house to pay for her education and other expenses.
They believe giving kids a good education and obtaining a degree is one of the best generations wealths passed on to them.
In the U.S., most kids pay for their college tuition and expenses. It can be challenging to make enough money to cover tuition while going to college, so Americans have a large amount of student debt.
Related Content: How to Balance Full-Time School and Full-Time Work (10 Helpful Tips)
From Fobes, we can see some compelling numbers about student loan debt in the U.S.
- $1.75 trillion in total student loan debt (including federal and private loans)
- $28,950 owed per borrower on average
- About 92% of all student debt are federal student loans; the remaining amount is private student loans
- 55% of students from public four-year institutions had student loans
- 57% of students from private nonprofit four-year institutions took on education debt
We are so grateful that I could graduate student debt-free with both my bachelor’s and master’s degrees, although it wasn’t easy.
We knew someone who wanted to buy a house but couldn’t qualify because of their massive student loan debt and needed to pay the loan balances first.
Now we are contributing $200 a month to our two kids education funds. Each will have $100 a month to their 529 education fund.
Related Content: What is a 529 Plan? – Everything you Need to Know
We hope to help our kids as much as possible, just like my wife’s parents supported her. Many U.S. parents teach their children about finance and support them in numerous ways. I am delighted to learn about both sides’ different cultures of money and finances.
Because seeing something different will let you open your mind and improve yourself.
We hope this blog post will help you better understand the differences between Chinese and American views on money and finance.
Have you noticed any particular money or finance habits in your culture? Let us know in the comments section below!
Disclaimer:
We hope the information in this article provides valuable insights to every reader but we, the Biesingers, are not financial advisors. When making your personal finance decisions, research multiple sources and/or receive advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!
