An Asian American's View on Why Asians Save and Earn more

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lnc

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I came across this and thought it is pretty good...


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.
https://blog.personalcapital.com/financial-planning-2/asian-americans-view-asians-save-earn-much/
 
This whole analysis is incomplete in that the Asian American population is skewed.  What I mean is that most of the Asians in this country immigrated here legally.  They had the financial ability to move across the pacific ocean and a support system (relatives) already in the country.  The population were generally middle to upper middle class and thus already had good economic habits such as saving and being frugal and have some level of savings before moving here and/or have resources in their home country to draw upon.  Asian immigrants also have a higher chance of being in white collar jobs when they get here and thus have more income to build a financial foundation for themselves and their children.

Academics are a strong priority for Asian immigrants but that is in large part because the parents have already obtained some level of academic success in their own country and had good jobs before moving here.  Actually, many Asians immigrated to the US in the 1980s and 1990s in large part because the education system in their native lands were so stifling and unyielding that very few were able to succeed.  The ones who chose to move here already had a view that they wanted their children to succeed academically. 

Debt being bad is certain true for many Asians but I would argue that it's not as true as one believes.  Plenty of second generation Asian Americans have huge house loans, lease their cars, and use credit cards.  Many young Asians (in Asia) live paycheck to paycheck buying the latest designer bags or gadgets.  Japan is notorious for having children that live in their parents' house and spend all their money on the latest fads and/or fashion.

While it is great that some Asian children get help from their parents, that is also decrease in both scope and frequency.  Many older Asians find themselves paying for their children's education and without much left to live on for retirement. 

On the flipside, I would say that most immigrants (Asian or not) are much more conservative financially. 

Of the factors listed, you can argue that they would apply to most immigrants.  Asian immigrants have generally started significantly higher on the economic scale than others.

Edit:  When people think of Asians, they think of Koreans, Chinese, Japanese, Taiwanese, and now Indians.  But people ignore significant populations such as Vietnamese, Hmong, Laotians, and Cambodians.  Those populations ended up in this country not out of desire but need as they were driven out of their homelands.  As such, they came to this country broke, unable to speak the language, and without much job skills.  Thus, those populations remain in severe poverty.

The poverty rate for Asian Americans is highest amongst Hmong, Cambodian, Laotian and Vietnamese. Hmong Americans have a startlingly high poverty rate at 37.8%, followed closely by Cambodian Americans at 29.3% and Laotian Americans at 18.5%.
http://borgenproject.org/asian-americans-facing-high-poverty-rates/

The high school drop-out rate among Southeast Asian Americans is staggering: 40% of Hmong, 38% of Laotian, and 35% of Cambodian populations do not complete high school
http://www.whitehouse.gov/administration/eop/aapi/data/critical-issues

For example, Vietnamese Americans only have a college degree attainment rate of 16%, only about one-quarter the rate for other Asian American ethnic groups. Further, Laotians, Cambodians, and Khmer only have rates around 5%. The cultural stereotype that "all Asians are smart" puts a tremendous amount of pressure on many Asian Americans. Many, particularly Southeast Asians, are not able to conform to this unrealistic expectation and in fact, have the highest high school dropout rates in the country. Again, not all Asian Americans are the same.
http://education.jhu.edu/PD/newhori...closer look at asian americans and education/

Conversely, the Filipino population have done quite well in large part because they speak the language natively and their ability to obtain professional careers such nursing.
http://en.wikipedia.org/wiki/Demographics_of_Filipino_Americans#Education

Finally...an excellent article about the myth of the "model minority"
http://colorlines.com/archives/2012/06/pew_asian_american_study.html
 
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