As relatively new immigrants, you?d think Asian Americans would earn less and be worth less than the median US household, but you?d be wrong... Let me share with you six reasons why I think Asian Americans save and earn more than the median..
1) Asians are allergic to debt. Taking on debt to purchase a car, a piece of property, or stocks is a relatively new concept for many Asians. We?ve been taught the tenet, ?If you can?t pay for something in cash, you can?t afford it.? This tenet runs counter to the heavy consumerism culture in America. If you go to any property developer in China (market is looking a little bubbly), it is common for 80%+ of the units to be purchased with cash compared to less than 40% in America. Debt is slavery. Cash is freedom. The US personal savings rate is roughly 4.8% according to the US Bureau Of Economic Analysis compared to 30%+ in places like China and India
2) Lots of historical uncertainty and upheaval. When you have political instability and war, people tend to save more for their uncertain futures. Over the past 100 years or so, there have been a lot of tragedies in developing Asia. The Cultural Revolution and the Nanjing Massacre are two such tragedies in China. The ongoing heavy hand of the government may be another. The Taiwanese are perpetually afraid the Chinese will invade their country. The Japanese have been aggressively saving since their bubble collapsed in the 1980s due to deflation. The 1997 Asian Investment Crisis destroyed the wealth of millions of Thais, Indonesians, Malaysians, and South Koreans. Meanwhile, America has enjoyed a much more stable path of growth thanks to our Democratic system. Having better expectations of the future gives you more confidence in spending more money.
3) Few Asians in leadership positions. When there are hardly any Asian American politicians or CEOs of large corporations, it?s more difficult to visualize yourself in such positions as a kid. When there?s no examples to aspire to, there?s a tendency not to even bother. There are also very few Asian Americans on TV or in the movies, except for in type-cast roles. People tend to hire and promote other people who look like them and share similar backgrounds. It starts with race, then sex, then socioeconomic background. There?s no wonder why everybody tends to look the same. Take a look around the office and see if you can find the pods of similarities. It?s not like people nowadays are intentionally racist or sexist. People just want to work with people who they trust most. It?s harder to fully trust and understand someone who has a different background. (Related: The Solution To The Gender Wage Gap)
4) Family finances. It?s common to see post-college Asian adults still live at home with their parents. Why pay rent when you can live with the parents and save money for a downpayment, is a common way of thinking. There?s also a traditional aspect of living at home until one gets married, unlike US culture, which encourages independence as soon as possible. If you save $30,000 a year in rent for 8 years until age 30, you will likely be better off financially than average. I?ve discovered living in San Francisco for the past 13 years that parental financial help for their adult children is quite common. I personally could never imagine living back home with my parents after college.
5) Sports is not a realistic way out. Only a tiny percentage of the population ever become professional athletes. But the odds are even starker for Asian Americans in athletics, an area where meritocracy reigns supreme. There are hardly any Asian American basketball, football, or baseball players for example. And these three sports are a part of Americana where the best athletes are revered as heroes. Even for non-contact sports like tennis, there?s only been a handful of Asian athletes who have risen to the top of the ranks. Without the hope of athletics, the only hope left is in the field of academics and the arts.
6) Academics is the main level playing field. If there is one level playing field among all races, it?s in academics. If you study harder, you will likely get better grades. If you get better grades, you?ll likely get into a better university. If you get into a better university, you?ll likely get a better job and make more money. It doesn?t matter if you?re only 5 feet 1 inches tall, you?ve got the same opportunity as someone 6 feet 10 inches tall in academics. Even if you are poor, so long as you have a stable household you can still study as long a someone who is rich. There is nothing more important to the Asian American population than academics. Parents will do absolutely anything to help give their kids a chance to excel in school. From after class tutors every day to Sunday school, I?ve had it all, and so have many of my Asian American friends.
