Wednesday, June 13, 2007

Japan - A Nation of Savers

For Japan in 2006, the savings rate of households headed by a salaried worker was 27.5%, up 2.2% from 2005. This compares to a US savings rate of -0.5% in 2005. That's right negative 0.5%.

When I lived in Japan, it appeared that the Japanese were spenders because everything was so expensive. Surprise! The Japanese are one the biggest savers in the world. Almost $50,000 saved for EVERY man, women and child.

Why do the Japanese save so much? I have heard or read of a few theories. One is that status for the Japanese depends more on position (university attended, company of employment) than on material goods. Therefore, the Japanese spend less on goods. Another reason that I have heard it that when the Japanese lost World War II, the citizens had very little and needed to conserve and save to survive. A third reason is that they are overly worried about the future.

Irrespective of the reason, the Japanese are savers to a fault. They have over 780 trillion yen(about $6.5 trillion) in near zero interest saving accounts. When I lived in Japan, a speaker, Kenji Ohmae, shared a story about 102 year old twins who were still saving money. When asked why, they answered "For a rainy day."

AMAZING! Saving seems to be a habit worth developing when young. I guess once a saver, always a saver for a lifetime:-)

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

2 comments:

Anonymous said...

Savings rates in Japan have fluctuated since the end of the bubble, but are high again. Many people theorize that this is due to households feeling as though they were 'burned' by the bursting of the bubble.

Personally, I would attribute the generally high post-war savings rate in Japan to 1) Massive campaigns by the Postal Savings to get people to save their money there in the 50s and 60s, combined with the low adoption rates of equity investment and the like. Also, 2) People cannot buy as much simply due to a lack of space. For the average Japanese family/consumer, there simply is not enough space to put more stuff.

Ok, one more: 3) Credit is not used as widely as in the US. It is still largely a cash-based society and despite the consumer loan horror stories, the average household carries much less debt than in the US...which might help explain why Americans save so much less.

L. Marie Joseph said...

It's all about how you were raised. When everyone around are doing the same thing, you tend to adapt. Saving to them is a part of life. Just like riding a bike or taking a shower. They have more discipline than any other country.