Does Culture Influence Your Personal Spending and Saving Habits?

How much of our spending and saving habits are influenced by our environment? Specifically, does the country you reside in and its culture affect how you allocate your monthly income? These are the questions we sought to uncover as we interviewed some of our employees right here in the Pint's office and gathered data from cross-cultural studies. Here's what we found.

Cultural Differences At a Glance

We first started off our research by looking at trends in various countries. Surveys have found that culture has some level of impact on our financial habits. For instance, The Economist observed that fun-loving Aussies who are known to treasure their work-life balance, spend about 10% of their income on leisure. In contrast, bookish South Koreans spend a higher percentage of their wealth on education than individuals in most other countries.

Economics also seems to be a big factor in explaining some of the disparities. In more affluent nations like America and Australia, where the average household expenditure per person is around $30,000, individuals will often spend less on food than those in poorer countries like Mexico and Russia, where the average spending per person is only about $6,000. The same goes for other developing nations like India, where it is reported that 37% of men and 31% of women live from paycheck to paycheck with no room for saving according to a Scripbox wealth and wellbeing survey. This means that while individuals living in some countries may want to save more, this is simply not a possibility, given that most of their income is being eaten up by living expenses.

The Influence of Policies

A country's governance may also influence the amount we spend on the essentials versus nice-to-haves. The Economist found that American households spend more than a fifth of their income on health care, compared to about 4% in the European Union, where public health care is the norm. In South Korea, National Healthcare Insurance (NHI) will pay for about 50-80% of your medical costs. This leaves one with more money to spend on luxuries.

Do Personal Factors Play a Role?

Despite these influential external factors in our environment, we wondered just how much one's own values and circumstances might affect our financial habits. Our team, composed of colleagues from all over, such as Singapore, Cambodia, South Korea, China, India, and Myanmar, weighed in on this matter.

Across the board, when asked what their savings were mainly for, many cited saving for a rainy day as the primary reason. This suggests that building a sense of security in our financial position may be a universal value we can all relate to. Nonetheless, some differences exist. For instance, given the existence of the Central Provident Fund, employees from Singapore generally save less for retirement. This government-mandated saving ensures individuals can financially support themselves in their golden years. This supports our initial hypothesis that policies have some effect on how we allocate our income.

Interestingly, one colleague noted that it boils down more to the amount of monthly income one receives than to cultural factors. Those in the earlier stages of their career could not afford to save or invest as much as those who have already been in the workforce for an extended period.

In a similar fashion, those who experienced a pay increment when relocating to another country found themselves saving more as well. On the whole, the team agreed that culture plays a minimal role in their saving habits.

"The culture and policies had nothing to do with my spending and saving because my salary used to be low, so you couldn't do anything with it except to survive," one colleague shared when recalling their experience working in their home country.

In terms of expenditure, two of our interviewees from Cambodia and Myanmar stated that ever since moving to Singapore, their expenses have increased across several categories, like housing, food, utility bills, and even personal purchases, which include gym memberships, entertainment subscriptions, and more. This is likely due to the higher cost of living in Singapore.

"The amount of monthly expenses is definitely higher in Singapore. However, I feel that I spend about the same percentage of my income on each category. That is most likely because I try to spend mostly on my needs and less on my wants," one interviewee shared.

The consensus view from our team was that while the cost of living in various countries can influence one's spending behavior, ultimately, one's personal values and belief systems come into play when we decide on where exactly we put our hard-earned cash each month.

Final Thoughts

When it comes to spending and saving habits, a country's culture and governance can certainly influence our decisions. However, individual factors, such as income levels, personal values, responsibilities, and even lifestyles, play an equally important role as well. Regardless of one's culture, being aware of one's priorities and goals is always a good idea. Taking charge of your own financial health and making smart financial decisions will ultimately help you lead a successful life.