How Different Cultures Deal with Money and Finances

Money management is an essential life skill, but there’s no one-size-fits-all approach to this. We may all lean towards achieving the same results, but the path to getting there varies from one culture to another.

It’s interesting to see how each country and their respective culture’s relationship with money is as distinctive as those cultures themselves.

Here’s a visual guide to give you an idea of how people from around the world deal with money. Dive in to learn a thing or two on how you can save and manage your finances better.


Fascinating Ways Different Cultures Deal with Money

1. Philippines: Alkansiya

Financial literacy rate: 25% 

Pag may isinuksok, may madudukot,” is a famous Filipino saying that roughly translates to “If you save something, you get something.” This best describes the alkansiya (coin bank) practice Filipinos grew up observing. If you put money in the alkansiya or coin bank, you have money to use when the time comes that you need it.

Adults would constantly remind children to put cash in their alkansiya, including coins left over from their school allowance, aguinaldo (cash gifts during Christmas), and money earned through completing household chores.

Filipinos are no stranger to banks, however, some still choose to save through this method, even combining it with money challenges for maximum results. While these informal saving practices are a great way to foster the habit of saving in children, as adults it is more prudent to deposit your savings in a bank. This way your savings have the chance to grow, thanks to interest.

2. Pakistan: Zakat

Financial literacy rate: 26%

One of the five pillars of Islam is zakat, which refers to giving alms to the poor and needy. Since Pakistan is an Islamic country, adult Muslims of sound mind and means are required to practice this religious obligation. Before giving zakat, individuals must hold an adequate amount of savings and wealth above the Nisaab threshold (minimum of 2.5% of their income) to cover for their own needs and their dependents’.

Giving zakat is not viewed as charity for Muslims. Rather, it’s their way of recognizing that everything they have is Allah’s and so they should use it to help others in His name. It’s also a way to free them from unnecessary temptations and greed. For the recipients of zakat, the Qur’an lists eight groups of people for whom it should be given.

You can follow this practice and donate to your chosen charity. Aside from tax benefits, helping others can bring more meaning to your life.

3. USA: Allowance

Financial literacy rate: 57%

One of the best ways to teach kids how to save and manage money responsibly is giving them allowance in exchange for doing household chores. This is a well-known and common strategy Americans use to prepare their children for adulthood. No chores, no allowance, no money.

A survey shows that American children between ages 4 and 14 receive an average of $9.06 weekly allowance. Additionally, a report conducted by chore-tracking app RoosterMoney reveals there are top-paying chores which earn kids more money compared to others, like washing the car, gardening, and cleaning their room.

Not only does this practice instill financial discipline, but it also demonstrates how money comes with hard work. Plus, it encourages children to be more responsible at home. It’s a win-win for parents and kids.

4. Mexico: Tanda

Financial literacy rate: 32% 

Over 77 million Mexicans don’t have access to bank accounts. So, how do they save without a savings account? This is where the informal economy comes in. Millions of citizens conduct their businesses and transact in cash due to lack of trust in the government and financial institutions. Because of this, many citizens participate in “Tandas,” a rotating savings group, as a form of social lending.

The cultural practice is widely popular in the country that 31% of the Mexican population partakes in Tandas. The way it works is, each participant contributes into a savings pool, then it’s rotated between group members. This lets individuals make big purchases that go beyond what they can afford with their income. In a way, it’s like a short-term loan orchestrated by people instead of financial institutions. Participating in savings pools can cultivate a strict habit of saving and keep individuals from splurging or impulse buying.

5. China: Frugal Living

Financial literacy rate: 28%

China is largely influenced by Confucianism and Taoism, both of which instill the concept and virtue of frugality. This cultural factor is one of the reasons why the country has one of the world’s highest savings rate – their gross national savings rate was 46% in 2016.

The personal savings rate in the country is also high. Chinese households regularly save 30% of their income. Another thrifty attribute they carry is bargaining. You’ll find many vendors willing to negotiate their prices and customers haggling their way to what they think are reasonable prices. The strict savings habit and frugality is almost like a tradition passed down through generations.

Even those living an affluent life still stick to remaining prudent, simple, and money-wise for a more secure financial future.

6. Germany: Connect with Cash

Financial literacy rate: 66%

Germany’s physical connection with cash is mostly influenced by their history with inflation, where during the Weimar Republic, money was devalued to worthlessness. This has dramatically affected their financial behaviors decades later. Fast-forward to now, Germans are known for their frugality, distrust of credit cards, hate for debt, and pragmatic approach to spending and saving.

This cautionary tale sits in the core of Germans’ financial habits. The rational implies that cash payments make it easier to monitor their expenses and spending habits, allowing them to live strictly within their means.

If you seem to depend on your credit card most of the time, often losing track of your spending habits, try sticking with cash like the Germans. This will help you spend wisely and prevent you from living beyond your means.

7. Korea: Money Envelope

Financial literacy rate: 33%

In Korea, an invitation card to a wedding doesn’t just mean that your presence is required. It also implies that a money envelope (average of 50,000 won) as a gift for the occasion is expected. The gift symbolizes celebration and new life for the young couple. Most importantly, it will help pay for the cost of the event. In fact, the fatter the envelope, the bigger the appreciation.

Aside from weddings, cash gifts became a common present for other events as well, such as Parent’s Day, ‘dol’ celebrations, and funerals. It may seem odd at first, but Koreans perceive money as the most practical gift for any occasion. Also, they usually expect their monetary gifts to be repaid when it’s their time to host similar events.

You can follow this practical tradition of giving monetary gifts over wrapped presents so the recipient can use it for necessities rather than items they have no use for.

8. Japan: Kakeibo savings technique

Financial literacy rate: 43%

The Japanese art of saving money, Kakeibo, which literally translates to “household finance ledger,” encourages the Japanese to set savings goals and spend wisely to achieve it. The method has been around for over 100 years. Its premise is simple: at the start of each month, they reflect on how much they’d like to save and the steps necessary to reach that goal.

It’s a good old pen-and-paper organizational scheme. When planning, there are four expense categories: survival (food, transport, medical, rent, other fixed expenses), optional (dine outs, shopping, leisure), culture (books, music, movies), and extra (unexpected costs such as repairs and gifts).

Keep better track of your expenses and savings goal by having a budget journal for a more accurate record of your finances. Or, you can try expense tracking apps! This way you have a clear view of your expenditure and helps you make better financial decisions.

9. India: Kuri Kalyanam

Financial literacy rate: 24%

Kuri Kayanam is a micro-financing scheme in the form of an event or party to help the organizer financially cover a significant life event such as a wedding or buying a house. Hosts would send out invitations to well-wishers and relatives with “kuri kalyanam” explicitly stated to be conducted for a specific date and time. Attendees are then expected to provide cash gifts.

The amount paid by each is noted in a register, and the receiver is expected to give with the same or twice the amount when it’s their turn to give back. On average, one would attend 10 to 12 kuri kalyanams. These can help save organizers money and kick-start any major projects or life events with monetary help, and returning the favor in the future.

10. Kenya: Fundraising tradition Harambee

Financial literacy rate: 38%

Kenyans are group-oriented people. The word “harambee” is the official motto of Kenya which means “let’s pull together”. This movement extends to their attitude towards money. To avoid applying for loans from banks, Kenyans draw upon their community self-reliance spirit to raise funds for important local projects.

Harambee events serve as an essential tool in bringing communities together. This and the kuri kalyanam tradition in India reflect today’s crowdfunding practices.

11. Panama: Caja de Ahorros

Financial literacy rate: 27%

Christmas time can put a dent on your wallet or credit card if you don’t save up beforehand. People in Panama get around with significant expenses like this by setting aside a monthly amount in their caja de ahorros (savings bank) throughout the year. Come Christmas season, they can cash out that amount to spend on gifts, food, travel, and others.

You can do something similar like participating in a 52-week money challenge at the start of the year. When December comes, you won’t feel the heavy burden of holiday expenses.

Summing It Up

Dollars, won, pesos, yen. Money is more than just a medium of exchange for goods and services.  A closer look at these currencies and their respective countries can reveal how individuals view and use cash. Whether consciously or unconsciously, how people manage their money is shaped by cultural factors. People’s attitude towards money is determined by how and where they’re raised. Despite that, our relationship with money is one that’s ever-evolving.

With the emergence of FinTech and ecommerce today, the way people save and spend is gradually evolving to include more modern practices and tools. Thanks to loan apps, the underbanked sections are given more access to fair and formal lending methods.  In the Philippines, Cashalo is spearheading this move towards financial well-being through education and access.