Financing Your Future: How to Economize and Save in Modern China

[kdavid]

Financing Your Future: How to Economize and Save in Modern China

Recently I have been developing training materials for the school I work for, Sunshine International Language Center (Harbin) and its partner Will-Excel TESOL. These materials aim to make the transition from west to east as comfortable as possible for our new teachers.

Over the past few weeks I have noticed a lot of activity on this forum in particular and thought that this material may be of some use to those of you considering (or already considered and now in the process of) moving to China to teach English.

Since there are a number of parts to this article (some of which have yet to be written) it may take a couple weeks for the entire article to be published. Nonetheless, this is a work in progress and suggestions / feedback are welcome from those of you who have been in this great country for awhile.

I hope this can help any newcomers to China

[Granted the prices quoted below are going to vary from city to city, the general cost of living in China in general is going to be substantially lower than in the west.]

What often comes as a shock to most just-off-the-plane expats is the general, dirt-cheap cost of living that China offers. Prices are generally a fifth of what they are back home, if not less. A $5 beer back home, for example, is a meager 0.25 cents at your local “BBQ” hangout, the average value meal at McDonalds $1.88 and spacious, furnished one-bedroom apartments can be found for around $125 a month. In addition to these low prices can be included the fact that the average western English teacher is making 300% or more than the city’s locals. It’s not hard to understand why many expats fall into the trap of living an over-the-top lifestyle here in the “Middle Kingdom”. The purpose of this article is to acquaint you, as a newcomer, with some options so that you can make the most, financially, of your time in China.

In the beginning, new teachers often arrive in China with a little home currency. Someone who brings $500 now recognizes that their once paltry sum of cash has changed from what used to be (on average) less than a month’s rent back home to what many local Chinese make in three (or more) months. This can lead to splurging.

New English teachers often fall into the trap of establishing expensive habits. These include, but are certainly not limited to, taking taxis instead of public transportation, eating out every meal, consuming familiar western products from brands of snacks and soda to fabric softener and clothing. It is often easy for newcomers to convince themselves that these extra expenses are worthwhile. For example, when considering the perceived hassle and uncomfortable process of traveling by public transit in China, newcomers feel that the extra expenditure of taking a taxi versus bus or subway is justified. Or, when noting that McDonalds or Subway is relatively cheap when considering their monthly income, it is natural to think that the time it takes them to prepare their own food, or the initial discomfort of ordering a meal in a Chinese at the local restaurant, is not worth the extra trouble.

The Chinese have a saying very similar to that of the West’s “When in Rome do as the Romans do.”: “ru xiang sui su”, which is (roughly) translated to mean “When you enter another’s village you should adhere to their customs”. Most English teachers move abroad to study and teach because they want to be immersed in a different culture. However, the pervasiveness of globalization does not always force us to adhere to the ambitious goals we held before we left home. It is easy for expats to be tempted by the convenience and familiarity that earning a high salary provides: fast food, dry cleaning, quick transportation, VIP treatment at restaurants and clubs, maid service, etc. However, it should be a priority to consider how living this type of western lifestyle affects not only your experience in a China, but also your financial future.

[i should note that the following calculations are based on the experience of me and my colleagues in Harbin and other major regional cities. Hectic mega cities such as Beijing, Shanghai and Guangzhou will, of course, have a different, higher, cost of living.]

In some cities a foreigner living a modest lifestyle would struggle to spend more than 20 RMB a day. Twenty RMB a day X 30 days in a month = 600 RMB a month. Take 600 RMB and subtract it from one’s monthly salary of 4,500 = 3,900 RMB which is (approximately) $500 that could possibly be put into a bank account and saved for graduate school, traveling, a car, a house, a family, etc. Taking into account that some foreigners will indulge in western temptations on occasion we can say that on the average foreigner living a modest lifestyle spends around 1000 RMB a month. In this case, you can still save 3,500 RMB, or $400, a month. Living in China is an unheard of financial opportunity for this reason: how much money would you have to save, or how much economizing would you need to do in the West to be able to save $460 a month? Very few people, for example, making $3,000 - $4,000 a month in the West can save $400 - $500 a month. However, in China this is quite easy to do. The trick: “ru xiang sui su”.

That is not to say that foreigners must sacrifice their familiar comforts in order to save money. Instead, learning how to economize on a Chinese budget while staying within your comfort zone is easy. Below are some ideas.

1) Don’t frequent places that cater to foreigners. These types of restaurants, bars, clubs and hangouts often charge four times more than normal local establishments.

2) Visit local markets and restaurants in the area around your home and take time to speak with the people who work there. Making friends in the neighborhood has a number of benefits, from getting the opportunity to practice your language skills to getting discounts on produce and a heads up on what not to order off the menu.

3) Just because it is a western name brand does not mean it is of a better quality, it just means that it is more expensive. Many western products are produced in Asia anyway. Regardless, China produces some very high quality name brands of their own that are a fraction of the cost of their western counterparts.

4) Time management pays in many ways. Get up half an hour earlier every morning and take the bus or subway instead of a taxi. If you save 20 RMB everyday on taxis you are saving 600 RMB a month, or 7200 RMB a year, which is equivalent to about $1000. You can save this type of money via time management in many other ways (e.g. preparing your own meals if your school does not already do this for you).

The last point that new English teachers should consider is taking advantage of the benefits their school offers. Good schools offer a free private apartment, free meals on site, free work / residence visas, free Chinese language classes, and free transportation to and from classes. When researching schools online ensure that your school offers this type of package. Taking advantage of these types of benefits can save you thousands of RMB a month, which can be put towards personal savings, investments and future trips abroad.

Aside from your experience in China offering you a number of unforgettable memories and experiences, it can also provide a solid financial foundation for future travels and endeavors. Establishing good habits and finding a good school is key to successfully founding a solid financial future.

[wrbt]

this case, you can still save 3,500 RMB, or $400, a month. Living in China is an unheard of financial opportunity for this reason: how much money would you have to save, or how much economizing would you need to do in the West to be able to save $460 a month? Very few people, for example, making $3,000 - $4,000 a month in the West can save $400 - $500 a month.

I disagree with this claim.

Of course it depends on where you live and everyone's situation is different but I submit the majority of people who make $3-$4k per month but can't save $400-$500 are lacking personal finance skills or the willingness to live under their means, and would struggle to save that amount in China as well.

Take your 1000RMB/month budget for the foreigner with modest lifestyle in China... what exactly is that lifestyle? A single person in the US making $3-$4/month probably has their own car and can choose to live in a pretty nice townhome or even a house with a yard depending on where you are.

There are plenty of reasons to move to China to work but doing it thinking someone will save more money by living on $125/month since one can't budget to save 10% of a Western salary in the West isn't one of them.

[kdavid]

I submit the majority of people who make $3-$4k per month but can't save $400-$500 are lacking personal finance skills or the willingness to live under their means

I agree.

Take your 1000RMB/month budget for the foreigner with modest lifestyle in China... what exactly is that lifestyle?

I take full advantage of what my school offers. I live in the private apartment provided by the school (it's a 1 minute walk away from my school). We have an in-house cook who prepares lunch and dinner for us. I eat breakfast on my own (pastries or such from across the street). I travel by bus when needed. I go out a number of times throughout the month with friends and/or colleagues; sometimes to places that cater to expats, sometimes to local hangouts. My life here is quite normal.

There are plenty of reasons to move to China to work but doing it thinking someone will save more money by living on $125/month since one can't budget to save 10% of a Western salary in the West isn't one of them.

The purpose of this article is to reach out to those who are considering or have already moved to China to teaching English and provide some examples of how to construct a budget so that they can save money while they're here. It's never too late to change your spending habits.

[trevelyan]

This reads as if you're trying to convince people that your wages are pretty good, because it's possible to save $500 a month. If so I agree with wbrt that it's dishonest. The salary might be decent for English teaching in Harbin, but the emphasis is misplaced: you can save wherever you are if you don't ever do anything, and most people will expect that they'll be able to buy a drink at a cafe without blowing the budget.

If you're trying to offer a compelling reason for people to come to your school, I'd simply point out that X in Harbin buys the same as X in other parts of the country. Is someone better off at 4000 in Harbin than 8000 in Shanghai? If you provide a place to live and the Shanghai job doesn't that's about even. I'd emphasize the accuracy of the Harbin accent and try to attract students who care about learning the language instead of just maximizing income.

That being said, the most effective way I know to earn money as a teacher is to set up private tutoring gigs. What makes a school attractive for people who are here a while is staff policies that enable extra work (classes arranged back-to-back, the same hours week after week, etc.)

Cheers

[kdavid]

This reads as if you're trying to convince people that your wages are pretty good, because it's possible to save $500 a month. If so I agree with wbrt that it's dishonest.

I'll quote my response to wrbt above that states the aim of this article:

The purpose of this article is to reach out to those who are considering or have already moved to China to teaching English and provide some examples of how to construct a budget so that they can save money while they're here.

Also, I don't see how the article is dishonest. It's very possible to save $500 a month in China while still living a modest lifestyle.

Again, the article is aimed at new teachers in China. You might call this "Financing in China for English-teaching Dummies" as it attempts to spell out a basic introduction of what one will most likely encounter over here.

[wrbt]

I wasn't so much disagreeing with the intent, just the questionable logic that it would be easier for someone who doesn't have the self-discipline to save 10% of their salary in the West would suddenly have no problems saving 75% of their salary in China.

In the vast majority of cases the problem isn't the ability to do so, it's the willingness to live within means. When you say:

Living in China is an unheard of financial opportunity for this reason

It implies some amazing financial advantage to being in China earning money and living cheaply that I just don't see. You're making an apples to oranges comparison with the people... if said $3000-$4000 per month earner lived in a studio apartment, took the bus, and made did his/her share of home cooking on the cheap like you're doing in China how much do you think he could save per month? If the person in China had a 2BR townhome and owned a newer car could they save 75% of their income?

[cdn_in_bj]

I believe that those new to China will find your article helpful. However, you need to be careful with the cost figures that you quoted as for the most part they do not apply to larger cities such as Beijing, and Shanghai. For example, $125/month is not going to get you a "spacious, furnished one-bedroom apartment" in Beijing - however, it may get you a room in a shared apartment. I realize that your article is geared towards prospective teachers coming to your school, but if it ends up getting published on the web it's going to get read by a wider audience. With some careful rewording you could turn into a selling point for your school over others.

Living in China is an unheard of financial opportunity for this reason: how much money would you have to save, or how much economizing would you need to do in the West to be able to save $460 a month? Very few people, for example, making $3,000 - $4,000 a month in the West can save $400 - $500 a month. However, in China this is quite easy to do. The trick: “ru xiang sui su”.

I don't think the above adds anything to your article and should be taken it out. I agree with the other poster that it sounds like a sales pitch.

[cdn_in_bj]

if said $3000-$4000 per month earner lived in a studio apartment, took the bus, and made did his/her share of home cooking on the cheap like you're doing in China how much do you think he could save per month? If the person in China had a 2BR townhome and owned a newer car could they save 75% of their income?

Yes, well said. Perhaps it could be noted that it is easier here to give up certain luxuries that we take for granted in the west (for example, of owning a car), but this also depends on the individual.

[kdavid]

It implies some amazing financial advantage to being in China earning money and living cheaply that I just don't see.

@wrbt

Where in China are you located?

If the person in China had a 2BR townhome and owned a newer car could they save 75% of their income?

How many English teachers living in China fall into this category? I'd be inclined to say not too many. Those who do, however, have probably already made the financial (among other) commitments to live in China long-term and therefore already established a budget that permits them to do such things.

I wasn't so much disagreeing with the intent, just the questionable logic that it would be easier for someone who doesn't have the self-discipline to save 10% of their salary in the West would suddenly have no problems saving 75% of their salary in China.

If you're working and saving money in the West then you probably wouldn't find this article to be of much use. This type of person probably also wouldn't be browsing the "Teaching English in China" boards on the internet. That is, unless, you're looking at making a transition abroad. Regardless, the article's intended audience is those who are (planning or otherwise) moving to China to teach English. The article spells out how to save money and budget on an English Teacher's salary.

However, I do agree with you, as I said above, when you stated that those with budgeting problems back home will most likely have budgeting problems in China as well. Hopefully, those considering moving to China to teach English may find some of the above advice useful.

@ cdn_in_bj

Thanks for your advice. I see where you're coming from and it makes sense.

Also, I do understand that the prices quoted within wouldn't work as well within a bigger city such as Beijing or Shanghai (this difference is commented on in one or two places in the article).

[Senzhi]

Can I suggest that if we do earnings/savings comparisons between different countries, we keep the positions the same: teaching?

There's absolutely no point in comparing earnings/savings of a middle management position in the EU/US with a teaching position here.

However, if we start comparing teaching earnings/savings, then I would definitely say the market is more attractive in China, or any other country where TEFL is a big business.

I'm not sure about teacher earnings in the States, but I can definitely say that in the EU they're in the lower base salaries. Not much savings to be expected, especially since many teachers are not paid during holidays (which EU teachers have a lot!).

And then I'm not even starting about taxes in the EU ...

[HashiriKata]

There's absolutely no point in comparing earnings/savings of a middle management position in the EU/US with a teaching position here.

I think you're right here, Senzhi. In fact, it could even be said that some English teachers in China may not even manage to get a job in their home country in the EU/US, so it's not a straightforward question of where you can earn more/ save more.

[roddy]

I think you've used an awful lot of words to say 'If you want to save money buy cheap things and take buses'. A list of prices for various products, and comparing expensive / cheap options will be useful, but the focus on saving is unnecessary I think.

[heifeng]

why don't you just use gem:

http://www.thesmokinggun.com/archive/0821061nwa1.html and tweak it a lil' for life in China

[Senzhi]

Heifeng,

Good one!

Maybe that airline Coy should have read it first before having to reduce their workforce.?

[wrbt]

Can I suggest that if we do earnings/savings comparisons between different countries, we keep the positions the same: teaching?

There's absolutely no point in comparing earnings/savings of a middle management position in the EU/US with a teaching position here.

OP actually had a pretty good estimate for teacher salaries in the US.

http://nces.ed.gov/fastfacts/display.asp?id=28

The average salary for teachers in 2004–05 was $47,750, about 2 percent higher than in 1994–95, after adjustment for inflation.

They'll also retire in their 50s with a pension and healthcare benefits for life, not to mention plenty 'o time off.

[Senzhi]

wrbt,

Packing my stuff already!

[simonlaing]

I think there would be a market for a how to book about being an english teacher in China.

Also tips on running classes with no materials. Finding materials on the internet.

What expectations are for teachers as this is often not told to teachers even when they request help.

Also the differences in teaching big classes versus small classes.

Buying a new bicycle and getting the joints tightened right away. basic Chinese phrases, turn left right,stop here. beef, pork, chicken. dumpling

It could be a great resource.

Also talk about cheap things Chinese people do for fun, play cards, chess, go dancing , take a walk in the park or up the mountain. Go window shopping etc...

I wish I could have had something like that when I started teaching.

Good luck,

Simon:)

[Rincewind]

simonlaing, I had a book just like that before I came to china. It was called 'Living and working in China' and was written by a person who came to work as a journalist in Beijing. However, this book was written in 1996 and so the impression it gave of China is quite different form the modern country.