Beijing families take on the financial crisis
As economies around the globe have slowed or fallen into recession, families in Beijing are reevaluating their budgets to prepare for potentially tough times ahead. Find out how different families make decisions about spending and saving money, whether they feel the effects of the financial crisis, and what their strategies are for making it through the downturn in one piece – or even ahead.
THE FAMILY OF SEVEN
With five teenagers under the roof, Karen and Phil Lanman spend conservatively and save as much as possible, putting away a total of almost USD 2,000 each month. Will, the oldest child, is in his first semester of college in the US, while Cody, 16, and 14-year-old triplets Zachary, Matthew and Anna attend the International School of Beijing. Karen’s husband’s job as an air attaché at the US Embassy pays for the family’s healthcare, house in Shunyi and the kids’ tuition at ISB, but with college ahead, the Lanmans are savers.
“I think we fall in the middle,” says Lanman. “We don’t take big vacations and we save before we buy something.” Before moving to Beijing, the Lanmans sold two cars and shipped a van to Beijing, so they don’t take taxis here. They’re also budget travelers; the family usually squeezes into a single room with double beds and get by with sleeping bags.
Twenty-one years ago, Lanman and her husband started an IRA and a joint retirement fund. Although the recent economic downturn caused their investments to decrease in value, Lanman isn’t too concerned because, as low risk-takers, they still have significant savings. Lanman, who oversees the family’s finances, says that they put away money for specific needs each month: RMB 2,050 for vacations, RMB 2,050 for emergencies, RMB 1,000 for home repairs, RMB 2,400 for retirement, and RMB 3,800 for college funds. They also set aside RMB 8,200 for Christmas presents each year.
The family spends less in China than back in the US, but it’s not as cheap as Lanman anticipated. The Lanmans are reluctant to buy on credit, preferring to pay in cash. With five children, the couple has been planning ahead. “Although we save money for college, we don’t have the intention of paying for it all. We do want the kids to help out,” says Lanman.
As parents, the Lanmans have tried to teach their kids the value of money; for example, Will worked as a bus boy in high school. Although the family employs an ayi, the kids are still responsible for chores and get paid for them; if they don’t complete the chores, they fork over part of their allowance (RMB 100 per week). “I tell them that I don’t wear all the clothes and dirty all the dishes,” says Lanman. “So why should I do all the laundry and the dishes?” Jessica Pan
The Monthly Budget (RMB)
Maintaining US home 1,380
Chinese tutor 2,400
College expenses 2,000
Car payment 2,000
Charity donations 1,700
Church donation 1,600
Kids’ allowance 1,600
School lunches 1,550
Gifts for back home 650
Cell phone bills 500
Travel (per year) 12,000