finance tips to learn from the chinese

Your attitude towards money can be traced back to money lessons that were taught back home. Whether you learned them incidentally or they were deliberately taught by your family, you carry those lessons with you as you grow older. The Chinese (at least the ones I grew up with) have specific money habits and here are the ones, I believe, everyone should learn from:

Frugality is a way of life

Since immemorial, the concept of frugality has been around the Chinese culture. Although one of the earlier texts you can find on them would be a Chinese classic from Dao De Jing stating the the three greatest treasures you can have in this world are love, frugality, and generosity. It's not about being a cheapskate. It's about being economical with spending and prudent with saving. It's an integral part of the Chinese way of life.

Save as much as you can

If you're a fan of financial blogs, then you've probably come across the 80-20 rule wherein 20% of your income should go to your savings. That doesn't even come close to what some Chinese (friends of mine) folks save on a regular basis. It's never about a specific percentage that goes into your savings account but rather how much (more) you can put in it every pay day. Some would go as far as putting away 50% to 60% of what they own because of the concept of delayed gratification. In this ideal, the only time you can spend "lavishly" is when you've achieved all of your financial goals (business, investments, etc).

Pay in cash

In relation to saving as much as you can, credit cards are a rarity in China. You save as much as you can because at some point you will need access to a large sum of cash. Whether it's paying for tuition or purchasing a new home, most would pay a straight one time payment. Take note that houses there are not cheap. Although, in some cases you may get discounts for paying straight and in cash.

Reinvest Profit

Ever heard of compounding interest? It's when your interest begins to earn additional interest. Now try applying this concept to business or other investments. Think of it this way, instead of cashing in profit, plough it back into your business or other investments. It's a way for your business to expand (essentially) without it coming from your pockets, and while ensuring that your profits grow exponentially.

Create Multiple Income Streams

Did you notice how these lessons are connected? When you have more than one source of income, you get to save more money which you can then use to reinvest for business expansion or to invest to create a new income stream. It's a way of life and a way of being realistic. Times are tough and it's rare for your day job to be enough to sustain the high costs of living around Oz. This is why some people blog, setup a YouTube channel, do weekend odd-jobs, and do all sorts of things outside of a regular job to scrape by.

Only have Smart Debt

The Chinese people are wary of debt which is why they almost always pay in cash. If you are going to have debt, however it has to be smart debt. Feel like it's time for business to expand? Borrow from the back to leverage business expansion. Need regular transportation to conduct business? Consider leasing a car in Melbourne with the smallest interest possible.