Americans love their McMansions and credit cards, but many people in other countries spend, save and manage money much differently. Here’s a look at some of the attitudes and approaches we can learn from around the world.
Find alternatives to student loans. The Wall Street Journal reports that the average Class of 2014 graduate with student loan debt has an outstanding balance of $33,000. Other countries view higher education as a collective, rather than individual, responsibility and offer more public funding for students pursuing their degree. “We’ve tended to focus on the individual achievement,” says Karl Petrick, associate economics professor at Western New England University in Springfield, Massachusetts. “[A degree is] good for you as an individual because it means more stable income. Whereas in Europe and the U.K., it’s better for society because you’re going to be able to contribute more to economic growth and to innovation and things that will push society further.” (Petrick has studied and worked in England, worked in Jamaica and taught in Hong Kong.) In Europe and Australia, it’s also more common for students to take a gap year before starting university so they can gain more life experience and make a more informed decision about areas to study.
Lessen your reliance on credit. The average American household carries over $7,000 in credit card debt, according to NerdWallet (just counting indebted households, that amount more than doubles to over $15,000). Several other cultures do not have such easy access to credit cards and loans. “In Jamaica, it’s more on a cash basis,” Petrick says. “It’s harder to get loans, and the interest rates are much higher. As a result, people tend to be a lot more careful with their money.” It might be unrealistic for Americans to completely opt out of credit cards (after all, credit reports are used by American insurance companies, mortgage lenders and even employers), but using them for emergencies rather than treating them as an ATM could help reduce our collective debt load.
Buy smaller homes. Many Americans have grown accustomed to ample square footage, with extra rooms for working out, storing wine, playing games or any number of other tasks. But houses tend to be smaller in other parts of the world. “By and large, housing is smaller [in England],” Petrick says. “Even in the countryside, your typical house would probably have two bedrooms and one bath.” Data from Shrink That Footprint shows that the average new home size in 2009 was 2,164 square feet in the United States compared to 818 square feet in the United Kingdom and just 484 square feet in Hong Kong. Housing prices vary around the world, but in general, smaller homes mean lower rent or mortgage costs and lower heating, cooling and furnishing costs. Micro apartments as small as 200 square feet have been popular in Asia and are finally gaining popularity in North America (although 400 square feet is more typical here).
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