Why You Shouldn’t Save Money Like a Young Chinese Woman


“[Chinese women] under 32 have an effective savings rate of zero.”

This quote comes from an article from Financial Times (via Jezebel) highlighting the 21st century yue guang zu or “spend-all-your-salary clan” women of China.

These twenty-something, working-class women are spending the bulk of their monthly paychecks on glamorous items like clothes, jewelry, expensive restaurants, and clubs with no care in the world. Their false confidence is solely based on the belief that their lives are better than their parents, and that their paychecks will continue to rise as time goes on.

The article highlighted one woman’s spending habits, “she spends at least 70-80 per cent of her salary every month – but towards the end of the year, it creeps up to 100 per cent or more”.

Unfortunately, the excessive spending habits of the yue guang zu are all to similar to many people in America. It’s important to spend your hard earned money on the things you love, but spending like these girls do as a therapeutic act will only lead to disaster.

Here’s 6 reasons why you shouldn’t save money like a young Chinese woman.

1) Cost of living rises with your paychecks

The yue guang zu spend because they believe their paychecks will be much larger in the future and it’ll make up for their extravagant spending. Yes, there paychecks will probably increase as time goes on, unfortunately, so will their cost of living.

According to Living Wage Calculator, it costs a family of four $61,595 to live in Chicago for a year. This figure includes housing, transportation, food, medical, etc.

If you assume a generous 3% increase in the CPI (Consumer Price Index), or cost of living, than after 30 years, that family of four will need $149,507 to equal the value of today’s $61,595. Paychecks tend to go up, but don’t forget that so does the price of everything.

If their yearly pay raise isn’t 3% or more every year, they might be making more, but they’ll also be spending equally more every year.

Ignoring finances and assuming a big future paycheck will fix all money problems is never a good way to go about handing your money.

2) Loss of compound interest years

I’m a big fan of compound interest and these Chinese women have no idea how much their time is worth as young people.

Most of these women are in their twenties and living at home. That means they have no major bills and are netting a large amount of money every month. If they saved even 20% of their income, they’d be able to reap huge benefits in 30 to 40 years when compound interest really kicks in.

Check out the graph in this post that shows how it’s possible for a 25 year-old to save significantly less over time than a 35 year-old, but still makes more in the end, due to starting young and using compounding interest.

Unfortunately for these Chinese ladies, missing out on the younger years will never allow them the chance to catch up and it’s going to be too late before they realize this.

3) Easier to save when you have no dependents or major bills

Most of these women work entry-level jobs with modest salaries. Many still live with their parents, but probably don’t realize they’re going to be for a long time because one day they’ll have a family of their own but they won’t be able to afford it.

Without any dependents, this lifestyle can last for a little while. But what happens if a child is added into the equation? It’ll never get easier for these women to save money, but they won’t notice this until their credit cards are denied by the local jeweler.

Kids cost a lot of money. The CPI for an adult in Chicago is 20,070, but add on one child and it’s $37,709 – an 88% increase.

You can mix saving and having a good time now, but don’t put it off waiting for a day that will never come.

4) Learning about money is easiest when you’re young

Learning how to handle money at a young age is vital for everyone. You learn the tricks to save, while still being able to make mistakes without grand consequences.

For a single person, a money mistake may lead to moving back in with your parents. Add in a family and a career, and a money mistake destroys lives.

When you’re young you have some time to learn how to handle your money and you can coast later on in life. However, these Chinese women will soon find out that a lack of money education when you’re young is forever painful because there will never be a better time to learn.

They may turn it around later on in their lives and realize how flawed their thinking was, but it’ll have cost them years of their salary by then.

5) Social spending is a race without a finish line

The women are referred to as a “clan”. Mob mentality usually leads to something blowing up. The ridiculous spending and materialism they are promoting will almost always continue to rise, until they are in over their heads.

If you surround yourself with outrageous spenders, chances are you may turn into one, too. As they get older, purses may turn into flat-screens, which may turn into houses. The items will get larger and more expensive, but their paychecks will remain the same. The credit cards can hold you over for a while, but the bubble will eventually burst.

How do your friend effect your spending?

6) Your money can appreciate, but items depreciate

This quote from a marketing agent in the article really got me:

“Investing in brands is an investment in the future,” he says, noting that purchases of expensive cosmetics, shoes, handbags and clothes “are expected to open doors” to a better salary. Many yue guang zu say the same: they are happy to accumulate short-term debt, in the service of their career.

Yes, a nice suit and car will get you into the country club, but the members will sniff out a phony after a while.

If properly saved, money appreciates over time and grows into more money. Items like purses and jewelry, on the other hand, almost always become less valuable. Perhaps, a few doors will open up in their careers but that is no excuse for such unnecessary extravagance.

It’s dangerous and it’ll only lead to you worrying about your credit card bills when you’re 34 and you’re kids are crying in the playroom.


These Chinese women obviously have some flawed thinking, and it’s quite comical. But learn from their mistakes and use these tips in your own life. I don’t know people who spend the way the yue guang zu do, but we all know some people who are in the same ballpark.

Saving now will only make life easier. Saving later will always make life harder.

Photo: Jakob Montrasio


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