Language Causes Us to Save Less Money?

“Bad debt is sacrificing your future day needs for your present day desires” – Suze Orman

Recently, I listened to a fascinating Ted Talks segment on the radio.  The discussion was about whether or not our English language is to blame for why North Americans save less money on average than other ethnicities such as the Chinese. The English language includes a past, present and future tense in how we speak.  The example that the interviewer gave was the concept of rain.  We commonly say “it will rain”, “it’s raining” or “it rained” depending on the timeframe of the event.  Interestingly, the Chinese language refers to both present and future events in much the same way.  In Chinese, one would say (loosely translated) “now it rain” (present), “tomorrow it rain (future) and “yesterday it rain” (past tense).

Keith Chan, a behavioral economist, believes that separating the present from the future creates a sense of disconnect in terms of the event and makes it more distant.  In the Chinese language, both present and future are reflected in the same tense and causes people to think about them in a similar manner, thus making it easier to embrace the concept of saving.

It isn’t only the Chinese language that shares this linguistic difference from English.  Chan researched Northern European countries with a “futureless language” and not surprisingly found that these countries turned out to be ones with the highest average of saving in comparison to the world. How do you process the concept of saving?  It is common to hear first-time home buyers comment that they are vigilantly squirreling money away for their “down payment” for a home (usually 5% of the purchase price), but what about for retirement?  I often hear mature home owners say that they will rely on their pension to see them through their golden years, and many buyers over the age of 50 are still comfortable with the idea of carrying a longer term mortgage so that they can afford their lifestyle.

In 2015, Switzerland was named the happiest country in the world.  Most of their citizens are multilingual and can speak Italian, German, English or French.  In France, debt is usually only a mortgage, as credit cards are not commonplace and student loans are extremely rare.  Denmark is also considered a happy country and interestingly, the Danish language contains “gender neutral” words which also may impact how gender roles are played, especially given that in North America, men are generally found to save more money than women.

I encourage you to ask yourself how you view saving – is it for a rainy day, something that you want but don’t need, or a special occasion such as buying a home?

Warm Regards,
Brian & Myles McCullough

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