On June 4, 2013, Wells Fargo released a survey report that demonstrates that Chinese Americans save more, manage their money better and are more confident about their current and future financial situation compared to the US general population. On the next day, June 5, in a Time Magazine article “Uh-Oh: We already Started Spending Like It’s 2005,” William Emmons, an economist at the St. Louis Federal Reserve stated, “the rise in consumer spending is somewhat worrying because it’s a product of the saving rate falling back to 2.5%.” This means that the majority of American families will not have sufficient saving for the rainy days and their future retirements.


What make Chinese Americans stand out in their money management? It is their cultural heritage, Confucian values on money management. Knowingly or unknowingly, most Chinese families around the world apply these wisdoms to their lives and benefit from them. Let me give you a few examples.


2500 years ago in the Book of Rites (礼记), Confucianism already advocated people “Size your spending based on your income (量入而出).” If using today’s words, it means “Living within your means.” According to the Wells Fargo national survey, most Chinese Americans follow this tradition very well. 65% of them pay off their credit card debt each month, as compared to 42% of all Americans. In addition, only 11% of Chinese Americans carry credit card debt of $5000 or higher, while 24% Americans reported to do so. What is the benefit of not carrying credit card debt? You do not have give away a large interest payment to the bankers. You contribute most of your hard-earned income back to your family.


The second Confucian wisdom is saving. 2500 years ago, the King of state Qi asked Confucius to define the essence of managing a nation: He answered: Saving. I guess because neither President George W. Bush nor President Obama consulted Confucius on this, we ended up having 16 trillion national debt today. Isn’t it? It is a fact that many American families have not learned such wisdoms, so they have to depend on the very next pay check to make a living.


In Chinese community, saving is an ingrained cultural value passed from one generation to another, regardless if you have read a Confucian book or not. In the Chinese New Year Eve, Chinese families always serve a dish of fish. This is not because fish is good for heart health, or taste reasons. It is because of a symbolic reason. The Chinese pronunciation of fish “Yu” is the same pronunciation of “surplus.” Having a fish dish in the New Year Eve dining table reminds every family member to save, and to have surplus for the following years.


Benefited from this wisdom, Chinese Americans save more. According to the survey, non-retired Chinese Americans have self-reported median retirement of $100,000, compared to $45,000 for overall non-retired Americans. During the financial crises when the housing price dropped to the bottom, many working class Chinese Americans were able to invest in real estate not because they are super rich, but because they have savings and good credit histories.


Last but not least, Chinese Americans also benefit from Confucian value on education. With an excellent education, in particular on math, Chinese Americans can better handle many money management challenges such as mortgage financing and security investment.


With good savings for the future and good money management skills, Chinese Americans are more optimistic about their financial futures, according to the survey.


What a difference Confucian wisdoms can make! I hope every one of you can benefit from them and succeed in managing your personal finances.


This blog was first published on June 12, 2013 on ChineseSecretsforSuccess.com.