Financing Your Future: How to Economize and Save in Modern China

[kdavid]

Financing Your Future: How to Economize and Save in Modern China

Recently I have been developing training materials for the school I work for, Sunshine International Language Center (Harbin) and its partner Will-Excel TESOL. These materials aim to make the transition from west to east as comfortable as possible for our new teachers.

Over the past few weeks I have noticed a lot of activity on this forum in particular and thought that this material may be of some use to those of you considering (or already considered and now in the process of) moving to China to teach English.

Since there are a number of parts to this article (some of which have yet to be written) it may take a couple weeks for the entire article to be published. Nonetheless, this is a work in progress and suggestions / feedback are welcome from those of you who have been in this great country for awhile.

I hope this can help any newcomers to China

[Granted the prices quoted below are going to vary from city to city, the general cost of living in China in general is going to be substantially lower than in the west.]

What often comes as a shock to most just-off-the-plane expats is the general, dirt-cheap cost of living that China offers. Prices are generally a fifth of what they are back home, if not less. A $5 beer back home, for example, is a meager 0.25 cents at your local “BBQ” hangout, the average value meal at McDonald's $1.88 and spacious, furnished one-bedroom apartments can be found for around $125 a month.In addition to these low prices can be included the fact that the average western English teacher is making 300% or more than the city’s locals. It’s not hard to understand why many expats fall into the trap of living an over-the-top lifestyle here in the “Middle Kingdom”. The purpose of this article is to acquaint you,as a newcomer,with some options so that you can make the most, financially, of your time in China.

In the beginning, new teachers often arrive in China with a little home currency. Someone who brings $500 now recognizes that their once paltry sum of cash has changed from what used to be (on average) less than a month’s rent back home to what many local Chinese make in three (or more) months. This can lead to splurging.

New English teachers often fall into the trap of establishing expensive habits. These include, but are certainly not limited to, taking taxis instead of public transportation, eating out every meal, consuming familiar western products from brands of snacks and soda to fabric softener and clothing. It is often easy for newcomers to convince themselves that these extra expenses are worthwhile. For example, when considering the perceived hassle and uncomfortable process of traveling by public transit in China, newcomers feel that the extra expenditure of taking a taxi versus bus or subway is justified. Or, when noting that McDonald's or Subway is relatively cheap when considering their monthly income, it is natural to think that the time it takes them to prepare their own food, or the initial discomfort of ordering a meal in a Chinese at the local restaurant, is not worth the extra trouble.

The Chinese have a saying very similar to that of the West’s "When in Rome do as the Romans do.": "ru xiang sui su", which is (roughly) translated to mean “When you enter another’s village you should adhere to their customs”. Most English teachers move abroad to study and teach because they want to be immersed in a different culture. However, the pervasiveness of globalization does not always force us to adhere to the ambitious goals we held before we left home. It is easy for expats to be tempted by the convenience and familiarity that earning a high salary provides: fast food, dry cleaning, quick transportation, VIP treatment at restaurants and clubs, maid service, etc. However, it should be a priority to consider how living this type of western lifestyle affects not only your experience in a China, but also your financial future.

[I should note that the following calculations are based on the experience of me and my colleagues in Harbin and other major regional cities. Hectic mega cities such as Beijing, Shanghai and Guangzhou will, of course, have a different, higher, cost of living.]

In some cities a foreigner living a modest lifestyle would struggle to spend more than 20 RMBa day. Twenty RMB a day X 30 days in a month = 600 RMB a month. Take 600 RMB and subtract it from one’s monthly salary of 4,500 = 3,900 RMB which is (approximately) $500 that could possibly be put into a bank account and saved for graduate school, traveling, a car, a house, a family, etc. Taking into account that some foreigners will indulge in western temptations on occasion we can say that on the average foreigner living a modest lifestyle spends around 1000 RMB a month. In this case, you can still save 3,500 RMB, or $400, a month. Living in China is an unheard of financial opportunity for this reason: how much money would you have to save, or how much economizing would you need to do in the West to be able to save $460 a month? Very few people, for example, making $3,000 - $4,000 a month in the West can save $400 - $500 a month. However, in China this is quite easy to do. The trick: “ru xiang sui su”.

That is not to say that foreigners must sacrifice their familiar comforts in order to save money. Instead, learning how to economize on a Chinese budget while staying within your comfort zone is easy. Below are some ideas.

1. Don’t frequent places that cater to foreigners. These types of restaurants, bars, clubs and hangouts often charge four times more than normal local establishments.
2. Visit local markets and restaurants in the area around your home and take time to speak with the people who work there. Making friends in the neighborhood has a number of benefits, from getting the opportunity to practice your language skills to getting discounts on produce and a heads up on what not to order off the menu.
3. Just because it is a western name brand does not mean it is of a better quality, it just means that it is more expensive. Many western products are produced in Asia anyway. Regardless, China produces some very high quality name brands of their own that are a fraction of the cost of their western counterparts.
4. Time management pays in many ways. Get up half an hour earlier every morning and take the bus or subway instead of a taxi. If you save 20 RMB everyday on taxis you are saving 600 RMB a month, or 7200 RMB a year, which is equivalent to about $1000. You can save this type of money via time management in many other ways (e.g. preparing your own meals if your school does not already do this for you).

The last point that new English teachers should consider is taking advantage of the benefits their school offers. Good schools offer a free private apartment, free meals on site, free work / residence visas, free Chinese language classes, and free transportation to and from classes. When researching schools online ensure that your school offers this type of package. Taking advantage of these types of benefits can save you thousands of RMB a month, which can be put towards personal savings, investments and future trips abroad.

Aside from your experience in China offering you a number of unforgettable memories and experiences, it can also provide a solid financial foundation for future travels and endeavors. Establishing good habits and finding a good school are key to successfully founding a solid financial future.