Want to Build Wealth, Reader?

Hi Reader,

Welcome to The Money Series and if you are new here, thank you for signing up. Personal Finance can feel ambiguous and overwhelming, but I am here to help simplify the journey.

Today, I’d like to take a cultural perspective and steal from the Chinese community’s playbook by exploring the Chinese secrets to building lasting wealth. There’s a lot to learn from their disciplined, long-term approach to money, and I’ve highlighted some of the best lessons for you.

Frugality. First, Chinese culture strongly emphasizes living well below your means—not just slightly under, but well under. To the Chinese, saving is seen not just as a means of financial security; it’s a way to honor one’s family and ensure that future generations have better opportunities. Hence, stability is prioritized over instant gratification. The Chinese practice the ‘pay yourself first’ principle religiously, often setting aside up to 50% of their income before expenses.

It’s not surprising that China has one of the highest savings rates in the world, currently above 40% (for context, the savings rate in the United States is less than 20%). The Chinese would modify their lifestyle such that it’s compatible with the budget that is left after savings are deducted and not the other way around. Frugality is deeply ingrained and passed down through generations. Children are taught early to save money received during festivities—enter the well-known red envelope tradition, where children are encouraged to save money gifted for the Lunar New Year rather than spend it.

Debt? No Thanks! One of the most striking financial habits in Chinese culture is the avoidance of debt. The use of credit clearly distinguishes the Chinese from Westerners. While credit cards are commonplace in Western countries, Chinese culture leans towards saving for purchases instead of buying on credit. The goal is to own things outright rather than being tied to interest payments. The Chinese take pride in savings and view debt negatively. If they can't fully afford something, they mostly wait and save instead of borrowing.

The Family Advantage. Young people in many Chinese households continue to live with their parents long into their 20s and 30s and this contributes to a higher level of savings. This strategy allows young adults to save and invest more of their income due to reduced living expenses. There is a strong sense of familial solidarity as pooling resources and supporting family members financially isn’t uncommon. Whether it’s helping a sibling start a business or supporting aging parents, this collective approach ensures that wealth is not only accumulated but also preserved across generations.

Investing in Education (and Financial Literacy). The Chinese place an exceptionally high value on education. In China, high school students often study 12 hours a day, reflecting the cultural belief that education is the key to success. This extends to financial education as well. Kids are taught how to manage money early on, often starting with small lessons like saving their red envelope money instead of spending it all.

In Conclusion…

China’s high savings rate is rooted in deep-seated values and a culture that encourages focusing on long-term goals by paying oneself first, living frugally, and prioritizing education and diligence. With these values, Chinese families create a financial foundation that supports multiple generations.

What lesson(s) resonates with you? Could adopting any of these practices make a difference in your finances?

Reflect on This:

• How much are you saving each month—could it be more?

Till next week, I am rooting for you, money-ly!

Dee

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Disclaimer: This does not constitute financial advice. Please conduct your research or consult your financial advisor for important financial advice.