The Little-Known Financial Habits of Asian American Millionaires
I immigrated to the US more than 30 years ago and have long considered here home. But Asian friends, especially those from China, still constitute a large portion of my social circles. Some of them are old acquaintances from China. Some of them are new connections forged in the US. Through this network, I’ve been introduced to numerous new friends, many of whom are also Asian.
My Asian friends work in different industries and have varied degrees of career success. But overall, they are doing well financially. Mostly in their mid-fifties, they travel the world frequently. Many of them own multiple properties. Quite a few in my inner circle retired early. Although we never talk about things like salaries or bank accounts, I can safely say that most of them are millionaires.
Why are they doing so well? One reason, of course, is that they’ve all received excellent education. Almost all of them graduated from top universities in China and came to the US for graduate school. Back then China was so poor that there was no way our parents could afford our American education. We had to secure scholarships from American educational institutions to come here. It was a highly selective process.
As a result, we have good jobs. A lot of us work in Silicon Valley where it is relatively easy to make money. But we also possess a few personal finance habits that have played significant roles in our ability to accumulate wealth.
“Can I have Your Recipe?”
First and foremost, perhaps because we come from an impoverished background, we all tend to live below our means. In fact, this pattern is almost programmed into our DNA or etched into our bones.
For example, when I was a graduate student, or even long after I started working, I didn’t use a shuttle or taxi to go to the airport. I always asked friends to drop me off or pick me up, because a taxi fare of $50, or a shuttle fare of $20, was extravagant. It was not that we couldn’t afford it. We simply considered it stupid to waste money for no reason. We would ask friends to take us to the airport, and we would gladly return the favor. In the process, we all saved tons of money. Only after we had entered middle age and had some savings accumulated, did we place a higher value on our time and opted for professional airport transportation services.
We don’t dine out as often as our peers of similar economic means and professional roles do. Home-cooked meals are not only healthier, they are much cheaper. A trip to the grocery store costing around $100 can sustain my family for at least three or four days, whereas a single meal outside would easily cost half as much. With the restaurant bill skyrocketing in recent years, it is entirely possible to spend all of it in one meal, even without it being very fancy.
Probably as a combined result of our culture and upbringing, we first-generation Chinese Americans are all adequate cooks. It’s easy to whip up a meal. Tofu, meat, vegetables, or whatever is in the fridge, can all be tossed into a wok and transformed into a decent dish. Years ago, when my father spent two years in Norway as a visiting professor, he would invite his colleagues to dinners, personally preparing all the dishes. The wives of the faculty members often requested his recipes (I admit they were probably just being polite). But everything was in his head. He didn’t have any recipes!
In recent years, as enlightened individuals in the West endeavor to limit their carbon footprints and be more environmentally friendly, we are proud to realize that we’ve long been doing good deeds. When we grew up in China, our families hardly produced any trash. We ate all the edible parts of plants or chickens. All the packages, if any, were saved up for reuse. After we immigrated to the US, we naturally preserved some of the traditions.
I always feel bad when I throw away things. A queen sheet with a small tear at the corner is of no use anymore. But what about the rest of the cloth? My grandma definitely could have made it into a twin sheet and used the remaining fabric for a quilt or a rag mop. Since I have neither time nor skill to do so, I’m compelled to dispose of it. Yet such action never fails to burden me with a sense of guilt.
“I Can’t Believe You Don’t Have Any Investment Property!”
However, being frugal is only one side of the coin. We are also diligent in investing the disposable income saved by living below our means. Some friends dabble in the stock market. Most are familiar with at least a few financial instruments. However, what’s truly remarkable is that a significant portion of us have become proficient in real estate investment.
Maybe it’s part of the ancient Chinese wisdom, we instinctively know the importance of owning a home. To reach this goal, we willingly forgo certain personal luxuries and prioritize saving for down payments as soon as we enter the workforce. Then we stretch to buy starter homes and trade up as our families grow and our means expand. Then those who are savvier or more adventurous take the next step by delving into investment properties.
A friend of mine, who relocated to the Bay Area a decade after me, quickly amassed an impressive collection of real estate assets. “I can’t believe you don’t have any investment property,” she once casually remarked. I thought her comment rude, vulgar, and tactless, but had to humbly accept her criticism.
At least I’ve dutifully invested in 401(k) all my life. We must take full advantage of the tax benefit and the company match. Even the more financially obtuse member of the community like me has absorbed this simple wisdom.
When our children graduate from college and start to earn a living, many parents urge them to follow in their own footsteps by promptly becoming homeowners. If the younger generation hasn’t accumulated enough funds for a down payment, some parents are happy to offer assistance. As a result, some young men and women who seemed to be little boys and girls only yesterday are now living lives of paying mortgages and mowing lawns. Compared to peers who don’t embrace investment so early, it’s easy to envision that they will soon enjoy a significant financial advantage.
I haven’t pushed my daughter to buy a home yet, because I believe she should enjoy a few more years of freedom from substantial commitments. Nonetheless, I do aim to instill in her sound financial habits.
I trust she has already learned by heart the famous Asian philosophy of living below the means. When she started earning money as a summer intern, we suggested she open a Roth IRA account. Since she started working, she has followed our advice and maximized her 401(k) benefits.
Einstein famously said, “The most powerful force in the Universe is compound interest.” As Asian immigrants, we all understand it viscerally. It’s never too early to start investing in your retirement account, we teach our kids. I hope they will also pass on this wisdom to their children.