The Chinese population have an average annual household income of approximately £5,800 a year and the average household saves approximately 30% of their income.
So a Chinese household is putting away roughly £1,700 each year.
They put us Brits to shame when it comes to saving and investing for their future, despite their much lower income and living standards.
Whilst the average British household brings home an average annual income before taxes of approximately £26,500, the average household savings ratio is a pitiful 4.9%.
By consuming less and saving just 10% of your income, as a British worker you could save more pounds than the average Chinese household, who diligently put aside 30% of their tiny income for their retirements, rainy days and to invest in their future.
A Chinese household living on 70% of their salary is basically getting by on around £11 per day, before they pay taxes, which really shines a light on our inability to save despite the vastly superior lifestyles experienced.
Let’s see what you could sacrifice to save the same money as a Chinese worker each year.
- With a coffee costing close to £5 a day, brits are on average spending £500 a year on this treat. We collectively spend £6.3billion on frothy coffee. I’m personally very guilty of having a regular caffeine fix, but when you think about how much we spend on it, it’s perhaps a little insane. What I do, is try to limit it to a weekly treat, rather than a daily fix. It actually makes the experience more enjoyable and helps prevent you becoming a caffeine addict.
- The Average Brit eats out on average 1.5 times per week and spends roughly £4,000 every year. You could save some money here by perhaps eating at home once a week, halving your dining out costs and saving up to £2,000. Or maybe get your eating out fix by taking advantage of the many offers available, rather than paying full price.
- The average family spends £58 per week on food. If you just reduced that down by £8 every week, that would be nearly £500 a year saved. If you invest sensibly and for a long time, that could make a huge difference to your retirement.
- Rather than cutting back, many people find it easier to earn more money. Perhaps you have a skill you could turn into a hobby business alongside your work, or you could learn a new skill to gain a promotion.
When you sit down and consider your financial wellbeing, you should consider a Chinese worker and their ability to cut back and make sacrifices to secure their future, despite the very low levels of income experienced.
There really are no excuses.
I understand the comparison to China is extreme and that there are of course numerous other factors to consider. But it’s important to realise that the global average savings ratio is about 20% and therefore we’re living far too much for the present without due regard for our future prosperity.
I expect this will have an impact at an economic level in years to come, but rather than thinking about the economy, please consider your own savings ratio and think about how much you are putting aside for your own and your family’s future wellbeing and security.