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People inside a shopping mall in Ho Chi Minh City, Vietnam, April 26, 2020. Photo by Reuters |
“None of the six people I contacted lent me any money,” the 26-year-old recalled. When he finally received a nod from one of his close friends, he was so touched that he burst into tears.
A graduate of a vocational training school, Quy works for a monthly salary of 15 million VND, higher than the average income in Vietnam, which stood at 7 million VND after the first quarter of 2023, according to the General Statistics Office. from Vietnam. Yet he has no savings.
“I get my salary transferred to my bank account at the beginning of each month,” he says. “I always end up spending it all before the middle of the month.”
He is no exception in Vietnamese society.
Ngo Thanh Huan, chief operating officer of personal financial advice service FIDT, says current generations are spending more lavishly than their older counterparts, a trend caused by financial and educational reasons.
Approximately 10% of respondents who participated in a survey by VnExpress answered “Yes” to the question “Have you ever had to deposit your property to ask for a loan, or borrow money from your relatives and friends, for lack of savings?”
This lack of financial management often leads to panic when unforeseen events occur. 67% of Vietnamese participants in Backbase’s “State of Banking and Financial Well-Being” in 2021 said they had experienced financial pressure. On top of that, the proportion of people in Vietnam admitting to not being able to manage their own financial resources was also the highest among the 10 countries surveyed by the report.
Hanoian Van Linh, 29, who works for a monthly salary of 30 million VND, says he has no savings after seven years of work. His monthly salary is also not enough to cover his living expenses.
He estimates that he spends about 10 million VND on drinking with friends every month, another amount between 15 and 20 million VND for online shopping and 6 to 7 million VND for online gaming.
These already exceed his monthly salary, even without taking into account what he pays in rent for housing.
“You only live once, so I don’t want to sacrifice anything,” he explains. “I used to save, but after moving I don’t anymore. I just spend all the money I earn.”
Linh often runs out of money before reaching the next payday. He turned to credit cards to cover his living expenses.
“I think we should teach students what to do with money and how to prepare for the long-term financial situation,” Huan said. “Instead of vaguely threatening them that their life will be bleak if they spend too much money.”
He also suggests that educational institutions teach their students about sustainable investing, so that they avoid falling into the traps of get-rich-quick schemes.
Huan also points to the fact that families’ financial conditions and the number of children in each family are now “inversely correlated.” This means more money can be spent on fewer children. Thus, young people grow up with more generous spending around them, a behavior that they end up emulating.
“Current generations also have more things to spend than people of the past, from shopping and hanging out with friends to traveling and socializing,” he adds. “Not to mention that the convenience and development of e-commerce platforms add to the temptation.”
When asked what he spends his money on, Quy says he collects shoes as a hobby.
“When I look around and see all my friends and acquaintances shopping, I can’t help but feel like shopping too,” he explains. “So I’m always in the mood to look for shoes to buy.”
He also admits that there are shoes, some of which cost him around VND6.8 million a pair, that he has only worn once or twice since purchase. He also has several pairs of the same design. Still, he can’t control his urge to buy even more of them, which he attributes to the fact that he didn’t have them when he was a kid, so now he doesn’t want to miss the chances of owning them again.
His shoe-collecting hobby isn’t the only face of life costing him financially.
“Whenever I feel like eating out, I eat out,” adds Quy. “I can go out with my friends to cafes three to four times a day and then dine with them in fancy restaurants. As long as I’m working, I’ll get paid and have money anyway.”
This attitude towards money can lead to several consequences, according to Huan.
First, young people can trade their chances of saving and investing for their future for things they don’t need. Many start investing later in life due to overspending in their youth and therefore have less time to make a profit, observes Huan.
Second, Huan warns of the potential burnout cycle that many people can experience when they spend too much money: they have to work harder to check things in their baskets, which leads to mental struggles, which that motivates them to make more purchases, and so on.
On top of that, the more time they spend working, the less time they have for their family, social ties, and themselves — contributing to burnout.
“I saw a study in which 65% of participants aged 30 to 35 said they regretted buying an expensive item they had made in the previous 12 months,” adds Huan. “And 50% of those people explained that they bought this thing only to realize they didn’t need it and it was a waste of money.”
In this case, overspending does not really guarantee happiness. But it ensures pressure when emergency expenses cannot be paid.
Quy is now on the verge of changing his spending habits. He says he felt deep regret when he couldn’t even cover his own needs just because he spent his money on things he didn’t really need.
Meanwhile, Linh is still confident in his lifestyle.
“I don’t borrow money from anyone but the bank,” he says. “I need to extract only 800,000-900,000 VND from my monthly income to pay [my credit card bills to] them, and that’s nothing.”
“So I’ll just spend my money.”
