Originally from France, I have lived in five countries and currently call Guatemala my home. Sharing and discovering cultures from all around the world has been fascinating, especially when it comes to saving and spending habits.
How bad are Americans at saving?
The average savings rate in France at 16 percent according to Fox Business – almost three times the U.S. average of 5.8 percent. The French are very debt-averse. Most of us still have ties with the generations who lived through post-WWII food stamps and privations.
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From a young age, we are taught to save for a rainy day. What we call a carte de crédit, or a credit card, is actually a debit card that will dig through your current account’s overdraft if you are low on funds. We almost never take on debt for education or to buy a car.
The only valid reason to borrow in my family is to buy a house. Even for business school, I found a company to sponsor my tuition, and only a few of my fellow students had a loan.
In Spain – where I lived, as well – young people tend to live with their parents longer, until they can leave the nest with a deposit for their mortgage.
In Guatemala, where mortgage rates are near double digits, most people in the countryside build their houses in stages, paying cash as they go. They will first build the main room where all the family can sleep, and have a tap outside for showering and doing the dishes.
Then they will progressively add another room, a kitchen, a second floor… Often, family members living in the U.S. will send a little money every month to support the building project.
Putting the money directly into a smaller house at first is a way of not spending the money on other things. The money sent from abroad is more than $6 billion a year, one of the country’s main sources of income.
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Saving in other countries
I have witnessed another neat way they save in Western Africa: the members of a community will come together as a group of 10 or 20 people, and everyone would put, say, $10 a week into a common fund.
Then they pick one member each week to receive the whole $100 or $200. It goes to each member until everyone has received the lump sum. I tried to implement it in my Guatemalan village, since people have a hard time saving, but they thought I would benefit from it in some way, so I moved on.
Asian countries are also known for their high savings rate and strong community support. China has an average 50 percent savings rate. Chinese migrants to America pool money through loan clubs to help those who arrived recently to get settled. Then, once you are comfortable, it’s your duty to pay it forward.
Because I lived credit-free for the first 25 years of my life, being introduced to zero percent interest rates and credit card rewards seemed like a steal.
But I soon found out it was a bait to make you want more and more. I got my first credit card in the U.K., where I worked for three years. I made sure it was paid in full each month to help me build credit, and I was eventually able to get a mortgage for a property.
Different financial worlds
What I liked in the U.K. was that your salary was given to you with taxes taken off, unlike in France, where you have to save up about a month of income to pay your taxes in September; or the U.S., where you overpay then get a tax refund in the spring. It made budgeting so much easier.
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While we save for a rainy day in France, people in Guatemala try to protect themselves from currency swings and inflation. It is normal to save your money in U.S. dollars; all the banks offer dual banking, and real estate transactions are generally conducted in dollars.
I am lucky to have been inspired by many cultures and their money habits. A quick online search will throw up books – such as The Immigrant Advantage by Claudia Kolker – that can teach you more about the successful habits of people from different parts of the world.