5 Smart Money Tips From Around the World

Americans have a lot to learn about how to save and spend.

The United States has earned a reputation for being materialistic, with a capitalistic culture geared towards consumerism. For a different way of viewing things, look to around the world to find cultural differences when it comes to money that could help Americans stretch their dollars further.

1. China: Save, Save, Save

When it comes to personal finance, the Chinese have one mantra: save. This is evident in China’s savings rate, which is one of the highest in the world. China’s gross national savings rate was 48.3 percent of GDP in 2015 according to the World Bank, the last year figures were available. The national savings rate in the United States was 19.2 percent for the same time period.

The habit of personal savings is equally strong in China. According to the Organisation for Economic Co-operation and Development, China’s household savings rate was 37 percent of disposable income in 2014, compared with a household savings rate of 5.77 percent in the United States. A common budgeting practice recommends setting aside 20 percent of income for savings.

Make Your Money Work for You

2. Mexico: “Tanda” or Savings Pool

If you have trouble getting motivated to save on your own, try a community savings pool system like the Mexican “tanda.”

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

Tandas are a notable money custom prominent in Mexican culture. Today this practice can be found in many Hispanic immigrant communities, as well as online through sites like eMoneyPool.

For those having trouble saving, the savings pool 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.

Make Your Money Work for You

And when it’s your turn to receive the pot, it’s a very nice payday — the range is typically $1,000 to $10,000. If you’re not part of a tanda, there are still easy ways to motivate yourself to save money.

3. Kenya: “Harambee” or Crowdfunding

Today, crowdfunding is a popular way for startups to raise funds to launch a product.  A Kenyan “harambee” is technically a form of crowdfunding, but the spirit of the tradition is much different from how crowdfunding works in the U.S. Harambee means “let’s pull together” in Swahili, and it signifies a tradition of community self-help events.

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. There are lots of creative tactics to dig yourself out of debt.

Make Your Money Work for You

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 than use credit cards.

Related: 10 Things You Should Never Put on a Credit Card

This preference for cash is so pronounced that Germans regularly use one of the most valuable currency denominations available anywhere in the world — the 500 euro note. Germans conduct 80 percent of their financial transactions in cash, while Americans conduct 50 percent, the German Central Bank found in a survey.

In fact, only 32 percent of Germans even have a credit card, the Central Bank found, compared to 53 percent of Americans. Cardholders who carry a balance will have to pay interest rates that typically start at 15 percent. Think of how much Americans would save if they adopted the German view that cash is king.

5. Japan: 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 denominations 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. Japan is one of the United States’ most valuable trade partners.

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 you treat cash the same way you treat trash, wadding up dollar bills like a used tissue, you will probably be more willing to treat money as disposable and spend it unwisely. Treating cash with respect will remind you of its value and help you resist the urge to spend.

Up Next: 50 Ways to Live the Big Life on a Small Budget

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About the Author

Elyssa Kirkham

As a finance journalist and editor with GOBankingRates, Elyssa Kirkham covers finance news, consumer savings and deals, and banking. Kirkham's work has appeared on major sites like Huffington Post, MSN, Investopedia, CU and CB Insight, The Motley Fool and a range of major local newspapers.

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