In the western world saving money and spending your earnings wisely is often considered the responsible way to act and a sign of a mature adult, whereas spending and living in the moment is for the young and irresponsible.
All nations have money in common, but who’s spending and who’s saving? And why? This article peers into the personal piggy-banks and community funds around the world to better understand what motivates our money-related behaviours. We ask the question: is your saving and spending behaviour more dependent on the culture you live in than your actual personality?
A cultural trait reflects a nation’s identity and influences its people, encapsulating the beliefs and traditions of the generations that came before. When it comes to money matters, the majority of a population choosing to spend or save will have been shaped by historical events, and tends to go one of two ways: living for the moment or saving for a rainy day. In collective cultures, saving money to spend on projects or items that will benefit the whole community is the norm. We look to Kenya, where harambee (Swahili for “all pull together”) sees everyone pooling their finances to reach a common goal. Similarly in Latin America and the Caribbean, individuals will work to save money for something that will benefit everyone.
Individualistic cultures, more commonly found in North America and western Europe, find people more likely to save and spend on themselves and their immediate family members with the aim of getting ahead of others and bettering their own circumstances, rather than that of the entire neighbourhood.
Individualistic culture, where the needs of the individual are prioritised over the needs of the group, has been on the rise since the 1960s as socio-economic circumstances developed, and people had access to better education, leading to higher incomes and a shift toward professional white-collar jobs. While this approach is often interpreted as selfish, populations that display individualistic culture often give generously to charities, donating both time and money, to make the world a better and kinder place.
WIth all this said, it makes sense that saving money looks different depending on which part of the world you might find yourself in. While this is largely influenced by culture, it’s also going to be affected by the economic situation of the nation, and in part by the nuances of the family and its individual beliefs, and how they’ve been woven into an individual’s upbringing.
It’s also interesting to note that spending and saving behaviours don’t correlate exactly, meaning, people will spend when there is an abundance of money or save when times are hard. In the United States, a hedonistic approach is often taken as the people consume more and more, from takeaway dinners to entertainment, Ubers and better apartments - and this is largely encouraged. These expenses are considered deserved and earned, and an unwarranted sense of security tells them not to worry about the future.
To get a better idea of what’s happening at home, we’ve taken a closer look at the Nordics, the Baltics and western Europe.
The Nordic countries are home to some of the happiest people in the world; in this case ‘happiness’ is a measure of overall satisfaction with life and a positive outlook for the future. While taxes remain some of the highest in the world, work-life balance reigns supreme: the people overwhelmingly value meaningful moments over money. That said, saving for a rainy day is embedded in the culture. Household savings in Sweden have increased since the first quarter of 2019, and continued to increase well into 2021 when the most recent research was carried out.
Finland’s population is super-savvy when it comes to finances, with 7 out of every 10 people saving or investing their money. According to research, 47% have made a habit of it and put away money regularly, while 23% say they save or invest occasionally. While the majority of Finnish men focus on retirement as a savings goal, women are more likely to save for holidays and travel. While traditionally men would invest and women would use bank accounts to save, the gap is closing as more women wise up to the ins and outs of the stock market and other financial products.
Across the Baltic states, money management varies greatly. Estonians are saving an admirable US$729 per year, or US$2 a day, and in 2020, the household saving rate in Estonia increased to 16.39 percent from 12.70 percent in 2019. Just over the border in neighbouring Latvia, people are dipping into the red by 26c each day, accumulating $2,306 in debt per year. Almost 7 out of every 10 people don’t consider themselves financially stable, as inflation continues to increase, and food, transport and housing costs rise. According to research by Swedbank Financial Institute, Latvians are cutting trips to cafes and cultural exhibitions, and reducing spending on clothing to preserve funds needed for more essential items.
With the largest economy of the Baltic states, Lithuania’s money matters are also worth looking into. A gender divide is immediately apparent, according to the research. The majority of men choose to invest their money, with the objective of growing their wealth, while 6 out of every 10 women make an effort to save. The financial habits of females living in Lithuania shows meticulous attention to detail when it comes to tracking household expenses and budgeting. The result is more than 30% of women saving between 21-50 euros per month, and 30% saving between 51-100 euros. Interestingly, Lithuanian women look to the future, with some planning as far as ten years in advance for their family’s financial wellbeing.
When we look at western Europe, to France, Germany, Austria and Belgium, we see strong economies where citizens still tend to save. Much like the rest of Europe, decades of government education and advice to save a portion of your income have become embedded into the psyche, while lessons learned during years of war and hardship are still well remembered. Again, the individualistic culture comes into play, and beyond that, the nuances of family and personal preferences and beliefs.
Whether you’re a spender, a saver, or somewhere in between, you might now have a better idea of how this behaviour came to be. Your personal preference and priority is part of it, but history, societal expectations and a nation’s culture will have also contributed greatly to your spending and saving habits - whether you know it or not.