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5 Smart Money Strategies From Around the World


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Photo credit: Claus Rebler.

Columbus Day was celebrated throughout America on Monday, with many schools, public offices, and companies closing their doors to recognize Christopher Columbus, the explorer that famously sailed with the ships Niña, Pinta, and Santa Maria to the American continents in 1492.

What does it mean to "Columbus" something?
Columbus' name has taken on a different meaning recently, according to NPR. Those who "Columbus" something "discover" something that's always existed -- like Columbus "discovered" the Americas. You've probably already "Columbused" a number of foods, holidays, or styles of dress from other cultures.

Experiencing cultural diversity can enrich lives and give common ground to people from different countries, races and backgrounds. All that can be learned from different cultures extends into financial values and money practices as well. Around the globe, the way money is thought about, handled, saved and spent varies greatly from what might be the norm in the U.S.

Related: World Interest Rates: Which Country Has the Highest Interest Rates

5 smart money strategies from around the world
The United States has earned a reputation for being materialistic, with a capitalistic culture geared toward consumerism. To find a different way of viewing things, GOBankingRates took a look around the world to find cultural differences around money that could help Americans stretch their dollars further. This Columbus Day, celebrate by Columbusing one of these five money practices or beliefs. (Hopefully you'll give full credit where credit is due, however.)

1. China: Save, save, save
When it comes to personal finance, the Chinese have one mantra: save. There is a strong culture of saving in China, Xin Lu told Wisebread.

"Frugality is really an integral part of the Chinese culture," she said. "My Chinese relatives regularly save 50 to 60% of their income and it feels normal to me that I save as much as them."

This is evident in China's savings rate, which is one of the highest in the world. China's gross national savings is estimated to be more than 51% of its GDP this year, according to the International Monetary Fund, almost three times higher than the United States, which is a little over 17%.

This savings habit, combined with increases in income, contributed to household bank deposits growing every year from 1990 to 2003, according to a study from Rick Harbaugh, associate professor of business economics at Indiana University. The habit of personal savings is still strong, with Forbes reporting most Chinese save around 30% of their income.

Americans would do well to get their savings rate closer to China's. The U.S. personal savings rate has hovered roughly around 5% for 2014, according to the Federal Reserve Bank of St. Louis. But personal finance experts recommend saving at least 10% of your income — some even say you should save as much as 20%.

2. Mexico: "Tanda," or savings pool
If you have trouble getting motivated to save on your own, try a community savings system like the Mexican "Tanda."

Tandas, or savings pools, are a notable money custom prominent in Mexican culture. This practice has even made its way to the U.S., and can be found among many Hispanic immigrant communities, according to the Latin American Herald Tribune, as well as online through sites like eMoneyPool.com.

Savings pools are an incentivized savings system in which all participants pay a set amount during a month into a pool of money. The pooled money is then awarded to a different participant each round.

For those having trouble saving, the savings pools offers two main benefits over simply depositing into a savings account. First, it keeps money out of convenient reach. Second, it provides an important social and community incentive to "save" each month by paying in. And this is enforced by the risk of "losing" the money paid in -- better to put in this month's contribution than to skip this month and lose all contributions up to this point.

And when the tanda lands on you, it's a very nice payday -- ranging from $1,000 up to $10,000, according to the Tribune.

3. Kenya: "Harambee," or crowdfunding
Crowdfunding has become a hot topic in the U.S. recently, but usually as a way companies, projects or start-ups can raise initial funding. A Kenyan "harambee" is technically a form of crowdfunding, but the spirit of the tradition is much different from the U.S.

Harambee means "all pull together" in Swahili, according to the Harambee Institute, and is a "tradition of community self-help events, e.g. fundraising or development activities."

JC Niala of Beyond-Motherhood.com said that a harambee is often used to crowdfund even at an individual level -- to pay for big life events or cover the emergencies of life. "People have parties and get-togethers or even just send round forms to help pay for medical expenses and college education, among numerous other things," Niala said.

One way to use this principle in the U.S. would be to ask for help. Ask your lender for an extension or to forgive a portion of your principle. Ask for cash gifts at big life events like graduations or weddings. Or find other ways that you and others in your community can "all pull together" to barter or trade to save each other money.

4. Germany: Pay cash, not credit
Germany famously has "a deep-seated aversion to debt and an emphasis on responsibility," according to The Associated Press. In short, Germans by far prefer to pay cash.

This preference for cash is so pronounced that they use one of the most valuable currency denominations available anywhere in the world -- the €500 note, worth around $600. In fact, only one in three of Germans even has a credit card.

The U.S., on the other hand, loves to charge. Americans are twice as likely to have a credit card as Germans, with 62% owning a credit card. The average U.S. cardholder has three credit cards, reports Debt.org, and among households with credit card debt, $15,607 is the average balance, according to NerdWallet.

With a typical credit card rate of 18%, cardholders would pay thousands in interest a year on an outstanding balance of $15,000. Think of how much would be saved if we could adopt the German view that cash is king.

Related: The World's 5 Richest Misers

5. Japanese: Respect for money
Japanese have a respect for money in all its forms, but like Germans, they have an especially high regard for cash. In Japan, all forms of currency are handled with respect and kept clean and crisp. According to The Economist, in Japan you can even buy anti-bacterial wallets that press and sterilize bills.

This respect is reflected in the customs around giving cash as a gift. Cash is a common gift in Japan, especially at life events like weddings and funerals. It is good etiquette to use crisp, new bills -- not old or wrinkled ones -- and to place the cash in special envelopes that have a red tie around them.

While this respect for cash is largely due to the high importance of cleanliness in Japanese culture, it also helps to underline the value of money. If a person treats cash the same way he treats trash or disposables, wadding up dollar bills like used tissue, he would probably be more willing to treat money as disposable and spend unwisely. But treating cash with respect will remind a saver of the money's value and help him resist the urge to spend.

This article originally appeared on GoBankingRates.

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