In Animal Spirits, Robert Shiller has mentioned that the saving rate of Singapore has been up to 50% until 1983. This rate is achieved through the Central Provident Fund program. Employees and employers each contribute to the fund and it is used for their retirement, healthcare and housing needs. Today, the rate is lower at 36% total but it is still among the highest rates in the world. This program was set up by Lee Kuan Yew, the first prime minister of Singapore. This high-saving economy has helped Singapore deal with inflation as it grew to a developed country and become an Asian Tiger. China has copied this strategy and its economy is growing extensively, almost 10% each year. China has personal savings, corporate savings, and government savings. It has promoted personal saving for decades. In contrast, United States has promoted consumerism with shopping malls and credit cards. Baby boomers do not have enough money for retirement. However, the X and Y generations in this country are getting more responsible to personal finance than we thought and young Chinese generation starts to spend more. Sales of brand name purses (Louis Vuitton), tech gadgets (iPhone, iPad), and cars (Mercedes, BMW) in China are even higher than in Western countries.
I listened to the Money Marketplace today and knew that students from a high school in Florida has brought back school savings bank program. A high school student will be able to open a savings account with a Federal Credit Union bank with $5 minimum, and the parents co-sign the application. Teachers also teach personal finance in class. Here is an excerpt from the show:
“TAZEEN RASHID: I was just asking some of my students today — they’re going to college and they’re seniors — how much do you know about financial management and one of them said, “I don’t know anything” It’s something which is very dormant and it needs to be awakened.”
The school savings bank program has already been around in U.S. since 1880s. But after World War II, the government promoted consumption and credit cards rather than savings. Now, the trend is shifting again back to save more and learn about banking at an earlier age. My parents did not teach me how to save and spend money wisely, but seeing my mom to be frugal as much as she can somehow has influenced my lifestyle. My dad tends to spend more but in a moderate way, therefore I am kind of mix of them. I still remember when I went back to Saigon in 2006, I spent 200 dollars to cover food, drink and a private room for 22 people in a high school reunion. I had a good time, but the ultimate purpose was that I just wanted to show off with my friends. I spent 1000 dollars for the flight ticket and 2000 dollars total for the trip out of my student grants. Half of the 2000 dollars was given to a person I used to love so much but he spent it too generously. I got hurt and realized he and I were so different in personality. Sorry I get into personal issue, he he. But it was a good experience. Now, when I join the workforce, I spend less and save more. I do not want to show off any more. Out of those 22 friends, I am only close to 7, so why not spend more time and money with them instead of with a whole bunch of people? It may be called social networking. Facebook has done a wonderful job for that purpose and I do not think I will spend 200 dollars again for a class reunion. Many of them now make more money than I do, so it is not necessary to give them a treat. I rather give money to a charity. I feel like I am getting old, like a 65-year-old person who only thinks about retirement fund ^.^
Do you have a savings account? Do you save regularly?