If you’ve ever wondered why some clients are more predisposed toward saving than others, you might have thought about their families’ influence. Some international researchers have chosen to take that notion deeper and broader — down to the cultural level.
In a three-country study that covered Australia, Canada, and China, Sydney’s Macquarie University and Indonesia’s Krida Wacana Christian University surveyed 755 adults. The sample group was divided according to income, religion, ethnicity, and immigrant status.
Noting the saving habits of the participants, the researchers found that ethnicity played a strong role: those with Chinese heritage were disciplined savers. The lowest-earning Chinese people living in China saved 31.3% of their income on average — much more than the highest-earning Caucasians, who set aside an average of 15.7%.
“The strong pressure to start a family early in life, the absence of a social safety net, and the sheer competition in a country with such a high population, all make saving the most basic thing you do to survive,” said finance analyst Jeff Poe of Platinum Professional Training, whose wife and grandfather were originally from China.
Chinese people in China saved more as they got more income, with savings averaging 48.9% for the high-income group. These habits, however, became confounded when mixed with migration: First-generation Chinese living in Australia or Canada saved less than homegrown Chinese people. Second-generation Chinese, however, saved more than their first-generation predecessors.
The study also found evidence of a faith effect, though it’s not straightforward. Among middle-income earners, the religious saved 35% of their income, while those who weren’t put aside 27%. Faith’s impact seemed to be reversed for high-income earners, with non-religious individuals actually saving more (36%) than religious people (25%).
Separate research conducted by Keith Chen, associate professor of economics at the UCLA Anderson School of Management in the US, also found that language can have an impact. His 2013 research paid particular attention to speakers of so-called “futureless languages”—ones whose grammar lacks a future tense for verbs.
He noted that Malaysians and Chinese — among whom tomorrow and today have no grammatical distinction — are 30% more likely to save in any year than those using languages that separate the future from the present, like English or Greek. Chen proposes that making a separate tense for the future also makes it feel more distant, which in turn makes saving harder.
While you cannot change your clients’ background, you can still affect their mindset — by creating a vision they’re willing to make sacrifices for. “The most important thing is having a goal,” said Helen Dundon, an Adelaide-based CPA and financial advisor at BaillieuHolst. “Most people are good at saving if they have a reason to. I never see saving for saving’s sake.”
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