Exploring Unique Money Traditions Across Cultures

Money always piques our curiosity, whether it’s spending, saving or investing. We are always trying to figure out how to make more money. But the article is not about that. 

It delves into unique savings habits and money traditions from diverse cultures, from India's golden affection to the community-powered Bayanihan spirit in the Philippines. Chances are you might be interested in implementing one of them. 

Let’s explore.

India’s Love for Gold Investment 

For Indians, gold has always been synonymous with safe investment options, particularly in turbulent times – and a hedge against inflation and currency deprecation. Beyond its financial appeal, owning gold also signifies auspiciousness, security, and a legacy to be passed on.

But the love for this shiny metal isn't sentimental; it's backed by statistics. India is the second-largest gold consumer in the world and stands out as one of the largest markets for gold bars and coins. Nearly half of India's gold demand comes from the middle class, with the southern region contributing to 40% of the country's total gold consumption. This affinity for gold shines through in the grandeur of Indian weddings where often the jewellery on the bride steals the spotlight. 

Moreover, investments made in gold have provided CAGR returns of more than 11 per cent over the past five, 10, and 20 years.

Take Devanshee Dave from Ahmedabad, who shared with Moneycontrol that he had been investing in gold biscuits since 2017. His rationale? If he invests in jewellery now, it might go out of style. Instead, he prefers gold biscuits, planning to pay making charges later when he turns them into jewellery. Plus, he highlighted the appreciation of the value of gold over time. For instance, in 2005, 10 gm of 24-karat gold was around Rs. 5,000, and now it's over Rs. 60,000 – a whopping return of nearly 1,100%.

This golden love affair goes back to the Mohenjo-Daro civilisation, where gold jewellery was considered a prominent legacy. In ancient times, gold was used as a currency and a store of value. 

Today gold investment avenues are diverse, such as acquiring jewellery, coins, bars, participating in gold exchange-traded funds, gold funds, sovereign gold bond schemes, and exploring digital gold. Gold as an investment instrument reflects the cultural value of wealth preservation and the importance of saving for the future.

Kakeibo, Japan’s Budgeting Technique 

The Japanese budgeting method Kakeibo brings an element of mindfulness and the art of reflective journaling into personal finance. Trust the Japanese to come up with that. 

Think of it as your thoughtful companion for your finances, who keeps track of your spending and provides insights into your financial habits.

Pronounced kah-keh-boh, Kakeibo was conceptualised in 1904 by Japan’s first female journalist, Hani Motoko, for an article in a women’s magazine, to help Japanese homemakers manage their monthly household expenses.  Today, it has become the go-to approach for mindful spenders, particularly among the younger generation.

Kakeibo acts as your financial advisor, prompting you to evaluate the necessity of each purchase. It's a method that gently instils frugality into your lifestyle, helping you save for your financial goals and tackle unforeseen expenses.

But how is it different? First, anyone can try it. It takes a departure from technology as it relies more on bullet journaling. Instead of typing away, it's all about putting pen to paper -- a low-key, meditative way to understand what's up with your spending habits. Just keeping it simple and hands-on. 

How does it work? 

1. Let’s set a budget. 
   At the start of the month, jot down your income after taxes and list your fixed monthly expenses. Subtract your fixed expenses (like rent, EMIs, bills, etc) from your income to calculate your available spending money.
2. Have savings goals. 
   Kakeibo is all about setting practical monthly savings targets, making it a positive experience. It's not about scolding yourself for a splurge; it's about celebrating mindful choices. Once you've set a monthly goal, stash away your savings by deducting that amount from your spending money. (Trust me, this helps.) 
3. Record your expenses 
   This is challenging but not impossible. Track every single purchase in your journal. The idea here is that by using pen and paper, you're compelled to slow down and reflect on it. It pushes you to think about how each spending choice impacts your future.
4. Evaluate 
   As the month wraps up, evaluate your spending by categorizing it into four pillars or categories as pointed out by Kakeibo

• Needs: the essentials like housing, groceries, EMIs, SIPs, etc
• Wants: non-essential splurges like dining out, shopping, hobbies, etc
• Culture: spending on cultural activities — books, museum fees, theatre, walks, concert tickets, TV streaming services, etc.
• Unexpected: the ones you don’t plan for like medical bills or home repairs.

On attempting Kakeibo for a month, I was able to separate my wants from needs, something I struggle with. I was able to be completely honest about my spending habits. 

Now add up the above and deduct it from your total budget to calculate your savings. 

     5. Reflect
 Every week or month, you need to answer four questions to tackle your spending

• How much money do you have?
• What's the savings goal this time?
• How much are you spending?
• Any room for improvement?

The last question encourages you to reflect and personalise the answer. It gives you a direction towards your future savings.

Overall, Kakeibo helps you improve your relationship with money by helping you understand the reason behind every purchase. 

Hóngbāo, the Chinese gifting tradition 

Let's delve into the tradition of Hóngbāo – the time-honoured practice of gifting red envelopes in China. During the Lunar New Year, these scarlet envelopes come out, filled with meaningful cash blessings. The choice of red isn't just a random pick; it carries deep cultural significance, symbolizing luck and prosperity in Chinese traditions. Doesn't it ring a bell with the Indian tradition of receiving money in envelopes during festive occasions in childhood?

Its history dating back to ancient New Year, is quite fascinating. In one legend, a demon named 'Sui' terrorized sleeping children on New Year's Eve. To keep them safe, parents tried to keep their kids awake. Once, a child given eight coins to stay awake drifted off, but the coins (actually the Eight Immortals in disguise) emitted a powerful light, scaring away the demon. Today, the red envelope, symbolizing those coins, is sometimes called yasui qian, or ‘suppressing Sui money.’

However, there are rules and customs to it. 
Only clean and crisp notes should be put in it. The envelopes should never contain money with the number 4 in it as its translation sounds like ‘death’ in Chinese. Hóngbāo is always received with both hands; accepting it with one hand is considered impolite. Opening it in front of the giver is also considered rude.

Bayanihan Savings Culture from the Philippines 

This unique saving culture from the Philippines, highlights the significance of community and cooperation in the realm of saving money. The term "Bayanihan" encapsulates the ethos of collaboration and community engagement deeply rooted in the country's rich culture and traditions.

Bayanihan Savings has its roots in the cooperative movement in the Philippines, kicking off with the idea of making lives better through teamwork.

The age-old tradition revolves around community members joining forces to support each other during challenging times, frequently taking the form of financial assistance. A typical expression of this practice is seen in informal lending circles, colloquially known as ‘Paluwagan.’ In these circles, members consistently pool money, and each cycle, the entire sum is granted to a different participant. This not only promotes consistent saving but also nurtures a robust community spirit and shared financial assistance, embodying the Filipino principles of communal unity and cooperation. A great Indian example can be our very own kitty parties which collect and pool money from the members and are given to all members at regular intervals. 

Coming back to Bayanihan, in the early 1900s, community members got together to form savings groups and credit cooperatives, to help each other financially. Take the Barangka Credit Cooperative, for instance, born in September 1997. Started as a way for neighbours to save and get credit, it's now one of the biggest credit cooperatives in the country. 

Islamic Banking

In Islamic principles, money lacks intrinsic value and cannot be sold at a profit. It is allowed to be used by Sharia only. Hence Islamic banking operates on the principles of an interest-free banking system, guided by the same. Unlike conventional banking, the focus here is on financing without interest to avoid riba (the fee for renting of money), making trade a non-issue. The standout feature of Islamic banking is its emphasis on risk sharing between the provider and the user of funds. Even profits are earned through equity participation instead of interest charges. This system ensures a balanced distribution of risks and rewards between the capital provider and the borrower. 

These particular banking practices find their origins in Middle Eastern business people who initiated financial transactions with their European counterparts during the Medieval era.  The Mit-Ghamr Savings Bank, founded in 1963 in Egypt, is often cited as the first Islamic banking prototype in the world.

Islamic banks strictly adhere to Sharia principles and have the potential to enhance financial inclusion and support small and medium-sized enterprises, especially among underserved Muslim populations.

Islamic banking has found its roots in diverse corners of the globe, with a significant presence in the Middle East and Southeast Asia. 

Are you aware of more economies or traditions revolving around money? Feel free to share in the comments below.