The 'social status syndrome', along with easy credit has created a huge mess of our society. Most people are very worried about what other people think of them. This worry is so powerful, that people have been driving further and further into debt just to maintain their social status with their friends and family. The saving rate in America is now -0.5%.
In China, the average saving rate in 50%. What would your friends and family think of you if you moving into a house half the size that you currently live in and began living on half your income? Some people are very afraid to do that, but in China living beyond your means is looked down on. So, the social culture of China is easier to live within your means than in America.
How to live like if you lived in China
Continuing to live beyond your means into the coming recession will likely cause a financial hardship. Many people are already facing layoffs, foreclosures and bankruptcies. Now is the time to learn about money so that you can get your family finances in order and avoid a financial hardship. There is no doubt that the coming recession is going to reduce the average household income. Leaving us with only two choices; either we reduce our spending on our own terms or our lenders create a financial hardship to reduce our spending on their terms.
We need to change the social status of our culture so that we can reduce our lifestyle and remain accepted among family and friends. The recession is going to force a change in our social status. Just like it already has begun by reducing the value of the housing market, making it less popular to own a large home. Our culture has begun to look down on or feel sorry for those that still own large homes, because we know they are probably financially hurting and wishing they could sell and move into a smaller home.
Teaching kids about money
I'm trying to teach my kids to save their money, but it would be a lot easier if we lived in China. Our culture is hard to teach kids the truth about money, because all day long they are taught by friends and marketing ads that money is for one thing - spending. Kids have so many toys, games and gizmos today, that it’s very hard for me to constantly say, ‘no you cannot have that’.
Kids also face social status syndrome as their peers tease them for not having cool clothes or the latest gadget.
The coming recession will at least be good for one thing, helping me teach my kids about money. There are already many examples of friends and neighbors that have run out of money, which has provided real life examples for me to teach my kids what not to do - and why we save money in the bank.
Reference Article: Arm your Children with Financial Knowledge