Personal Finance, the East Versus the West




Maybe you have student loans or massive credit card debt (as a result of living off stipends while going to school), underwater in the home or find yourself puzzled about retirement, if this is you, you’re not alone. The list of financial guidance counselors online is plentiful and the information sound, from Warren Buffett to Robert Kiyosaki or Dave Ramsey, all of them tout just a few simple things to get your financial life in order. We don’t realize how much we overspend on just about everything; movies, video games, eating out multiple times per week. The problem is that this lifestyle has become the norm in America, thus we never stop to think what we could have done with that money, because those expenses to us have become as normal as buying basic food for sustenance.

The basic premise that I referred to goes something like this, save more than you spend and invest early. Everyone asks, how can they afford to invest with all the burdens that millennial society has presented upon us. Well, taking a page from Buffett or Ramsey, buy index funds or mutual funds, reinvest your dividends and be patient. Just investing a couple hundred dollars a month compounded at the long-term average return of the S&P 500 will make you a millionaire after 30 years. Buffet goes a step further and says to make sure to buy more when prices are suppressed, everyone buys their favorite food or car when its on sale, but not their favorite investment or real estate, this logic is dangerous. If someone says that investing is too risky, well there’s nothing more risky than buying material items that lose almost all of their value after purchase.

Following up with Kiyosaki, I have always taken his simple mantra to heart, “buy assets, not liabilities”. If you want a liability like a second home, a nice new car or something else you can’t afford, get an investment that provides a stream of income first that will allow you to pay off the debt on the item you want to purchase. An example would be paying off your first home, renting it out and using the income to pay the mortgage on your second home. I try to take advantage of all these logical pieces of advice as often as I can and have also had the privilege of being part of a Chinese household due to the marriage to my wife.

Comparing the Eastern and Western values of investment, the advice above has been known since elementary school for most people I know in China, its really quite amazing that our youth don’t figure it out until its too late. Chinese people save and invest like you would never believe. Movies are for kids only in China. Probably 90% of meals are eaten at home and the parents always stash away money for their children’s education and first home purchase. In this sense, we have a lot to learn. We need to save for our future selves and family, not to be greedy but to have the ability to give and take care of others in need. If you wind up with nothing in later life, you will only be needy.

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