China's newly frugal youths

Source: BBC

Amid the global economic downturn, young people in China are defying government initiatives to boost spending and coming up with novel ways to save money.

Back in July 2008, Wang Chao, a 28-year-old office worker from Shanghai, told the BBC he spent 2,000 yuan (then about $290; £150) in a single day on trainers, clothes and gadgets.

But when last month his company cut salaries by half, Wang said he was forced to cut back on luxuries and swap restaurant meals for homemade packed lunches.

"My monthly income has been cut by 50%. I have had to reduce my living costs, though I'm still able to eat well."

Reducing costs during a recession isn't news. There isn't much choice. The key to succeeding on life is to reduce costs when things are going well and not spend money on meals, trainers, clothes and gadgets.

When things are going well, one has to make the most of it and benefit from it. It's a cycle and everyone knows the bubble will burst. It does every decade. People who resisted luxuries over the last few years are now laughing. A couple of my good friends bought houses just before Christmas. The price was so low. On Boxing Day I went to mall and bought 8 items for $100. During the good times it would cost me nearly $300.

Nothing lasts forever so be smart at all times. Three years ago, a young couple moved next door to me. They were both 25, just married and both had high paying jobs. They bought this house which was nearly 600,000 with a thiry mortgage. If that wasn't enough, they took out a second mortgage and bought two Lexus! I asked them if they could afford all that, they said they'd enjoy life and just pay it off over 30-40 years.

"We're young, we have the rest of our lives ahead of us"

Then the bubble burst and they both lost their jobs. Now what? Let's just say they're not my neighbours anymore.