Catchy title, no? Not only is it currently a topic of global discussion – what with America accusing China of not stabilizing its currency and all, but it has a profound meaning to my exploits as I learn to live here. I’ll elucidate:
I consider it very expensive to live in the Western world, and all of you who pay taxes and buy… anything might feel compelled to agree with me. The current estimate is that a person must save approximately $1 Million by retirement age in order to live comfortably in America after retirement, and even now the experts are saying that is not enough. Furthermore, at my age, I would not make that target no matter how frugally I lived in America.
By contrast it is very inexpensive to live in China. With the Yuan currently trading at a rate of 6.78 to 1 against the dollar, and with the knowledge that one can eat on less than 10yuan a day, that loosely translates to the idea that one can eat well for a little over $1 a day. Follow the logic?
I made this move with my focus partly on my finances by retirement time. My plan is to allow what money (dollars) I have in my retirement and various savings accounts accrue interest while saving as much money as possible while I work here. By the time society says I am too old to work (in any country) I should have a tidy sum of Yuan to live cheaply on between my savings here and my savings there.
I get paid a little over 4000yuan to teach here. My apartment and utilities are covered by the University, as well as my medical insurance. With no car, insurance or taxes to pay, I postulate I can live off a quarter of what I earn here and save the rest. 2800 to 3000yuan saved over the year makes for a net savings of 36,000yuan: a handsome profit for the work I do. Make sense? Bear with me, I’m getting to the point!
In thinking about these past 30 days, I remember that Sam had taken me to exchange money within my first few days of being here. I was able to exchange $140. So, I started my life here with a little over 900yuan in my pocket. I’ve had minimal capital expenses: a SIM card for my cell phone, a few household goods… and everything else went to food. I finished this 30-day period with 250yuan still unspent.
I’ll admit I was seeking to alleviate my depression and culture shock. When I reached for that pack of Chinese Oreos (3.8yuan), when I bought all that comfort food, when I bought food simply because it had a brand name that was familiar to me and familiarity was of paramount importance to me this past month, I wasted a lot of money. The junk food that I bought did not taste the same and indeed was not conducive to comfort or good health. I wouldn’t buy such food in America.
Yet my thinking was: 3.8yuan for 14 Oreo cookies – less than a dollar! Great! I’m buying! What I failed to connect is that I gave up the right to think of my money in American currency when I formulated my plan to come here. As a matter of fact, should I continue to automatically convert every Yuan I spend into U.S. Dollars my plan will backfire and I will not have the tidy sum I expect to have in a few years.
I bought a high quality dustmop for 58yuan – about $8.65. A great price in American currency… but would I pay $58 for a dustmop? Probably not. I spent 26yuan in a restaurant eating Western food – about $3.87, which sounds very reasonable. But think of it this way: would you pay $26 for a fast food meal? That’s downright unreasonable.
The point of all of this is: I’m still living as though I have a $75K/yr income and retirement is far over the horizon. Furthermore, I’m thinking of the Yuan as ‘not a real currency’ and maintaining the Dollar as my base currency. Realistically I only have maybe a good 20 years until society declares I am too old to work, and quite frankly, I don’t want to have to work that long. Even at this gravy job! That was kind of the whole point of my moving here, from a financial perspective. If I persist in my thinking about the Yuan, I will be a burden to my children and to society because I will not have enough money to live self-sufficiently come retirement time.
I need to think differently about the Yuan. Maybe I need to think of it in terms of Dollars. Not converting it to Dollars, but as though I were actually spending Dollars instead of Yuan. At least until I get used to the Yuan being my principal currency.
I lived on $140 dollars for one month. Not bad at all. Until you consider that all of my expenses save food were met by the University and I had nothing else to spend that money on but food. Until you consider that $140 is 938yuan.
Who spends $938 in one month with nothing but a few Oreo crumbs to show for it?
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