I always pay for my purchases upfront. When I shop for my groceries and chocolates, I pay for them in full. When I buy something slightly more extravagant such as a bag, chair or laptop, I also pay in full. Upfront.
I thought everyone paid in full for what they bought – with the exception of very expensive things such as houses, cars and boats – until I moved back to Melbourne. Paying by installments is popular and heavily in-your-face promoted by countless of places from supermarkets to hardware stores here in Australia.
Electronics store in Melbourne’s city offers generous installment agreement payment plans. Photo: Mabel Kwong
When I pass what I want to buy to the cashier at Target, I always get asked if I want a “lay by”. That is, I always get asked if I want the departmental store to keep my “purchases” for me, purchases that usually cost no more than $100, until I paid for them in full by installments. While growing up in Singapore and Malaysia for a decade, I was never ever asked if I wanted to pay in chunks when buying clothes, food and furniture.
Paying upfront is very much the preferred method of paying for things in Asia. My dad baulks at paying by installments. While we were shopping for a sofa for our apartment in Melbourne, he sniggered at the signs in Harvey Norman offering two years’ installment agreement payments. According to him, if people choose to or have no choice but to pay by installments, it is as if they “can’t afford what they’re buying” at that moment; paying by installments is an easy way for the cash-stricken to buy luxurious items, forcing themselves to pay through the nose.
Owning material items is deemed prestigious in Asian cultures. So this mentality arguably drives Asians to pay for their purchases all at once. Paying the full price upfront gives Asians the right to immediately attain full ownership of their purchases and show them off and enjoy them to their hearts’ content. There is no need to worry about paying off installments in the coming years, installments that we may or may not be able to pay off in the future and risk finding ourselves strewn with debt.
In addition, Asians frown upon and are superstitious about borrowing and owing money. My parents constantly remind me to pay back everyone whom I borrowed money from before the start of each Lunar New Year. If I did not, they believe it will bring me bad luck money-wise and I will face financial hardships in the year ahead.
There are times when Asians not only just pay in full upfront, but also pay entirely in cash. Even for pricey expenses. Every time we go shopping for clothes, furniture or even a few grocery items, my parents believe in “getting the money ready” and “coming with the cash” to pay for our expenses. A trip to the ATM is always the norm for us before we embark on family shopping trips. Also, it is common for people from China to pay the full amount in cold hard cash at one go for apartments in Western countries. Cash is indeed king for these Asians.
Paying in full and by cash is an opportunity to save on interest that comes with paying by installments and credit cards. Many Asians tend to be rather cautious parting with their hard earned dough, so if they see a means to save money, chances are they will go for it.
This attitude is quite the opposite of the typical “spendthrift-mentality” in the Western world. I have many Caucasian friends in Melbourne who count down the days to pay day. The instant their paycheck rolls into their bank accounts, they hit the shops or splurge their savings on travel – and later moan about being eternally poor. So paying by bit by bit, month by month, would suit them well and perhaps that’s why there is a strong pay-by-installments culture in Australia.
Do you usually pay in full or pay by installments?
Mabel Kwong 
I grew up in Singapore and Malaysia too and definitely pay everything in FULL. Besides paying in full, trade-me or ebay was unheard of at that time before I moved to NZ and why would anybody want to buy someone else’s old bed or old sofa set?? Majority of Asians do not live dependent on their pay cheque because most have their rainy day money put aside for daily expenses and have some buffer (in this context meaning cash fund before the next pay cheque). There was no such thing as lay-by. The Asian mentality is either you can afford to buy something and buy it there and then or not at all. I do confess though having lived in NZ for over a decade, I now have a trade-me account and had bought the odd bookcase and umm, what else, oh a nice display cabinet from trademe. 🙂 I can well relate to this post Mabel. Thank you for sharing.
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“The Asian mentality is either you can afford to buy something and buy it there and then or not at all” – perfectly well said! Like you, most of the time I adopt this mentality too. I don’t know if most Asians ever touch their, as you call it, buffer or rainy day cash…I’ve never really heard of my family or Asian friends reaching for it to use in dire situations (e.g. paying for insurance, paying for necessary major home renovations). Maybe many Asians are just really good with their money. But I confess like you – I’ve used a good portion of my savings of late to buy cool-shirts from Redbubble. I must stop 🙂 Thank you for reading.
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Great post, Mabel 🙂 Growing up in Singapore, my parents lived by this mantra: “if you can’t pay for something in the shop in full, you can’t afford it”. Of course, houses and cars were the exception. Over the years, this has become a formula for living within my means.
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Thanks, Cat. I think that’s a very good formula to live by. Definitely stops you from splurging on expensive items that you may not find interesting/valuable/meet your needs in a week or two after you bring them home 🙂
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In 2007, I was once reading an article by a Chinese economist which was trying to come up with policies to stimulation consumption in China, especially rural areas. It said one of the problems was the reluctance of Chinese to borrow money. In hindsight, a greater willingness to borrow money may have seen China become like Greece is today.
I do know lots of Asians who borrow money, some of who lost it gambling but on the whole there seems to be a lower willingness. Perhaps this is because most Asian countries lack a social welfare safety net so individuals don’t have the freedom to splurge with the comforting knowledge that if they lose their job or get sick they have welfare to fall back on.
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Yes, the lack of social welfare support for people living in Asia is a very valid reason for why Asians don’t splurge too much. Australia has Centrelink that works towards supporting low-income earners and the unemployed. It’s not that long of a wait to claim welfare here.
I’ve come across many young Asians today willing to spend, spend on fancy clothes, food and cars. And of course they pay for it all upfront. It seems that they have an endless supply of cash, a lot of which I suspect are from their Asian parents who have good managing-money/investment habits.
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I don’t know for other Asian countries but I think in my country ‘Thailand’ we prefer to pay by installment. We go shopping and we can see advertisement about buying entertainment, home appliances, gadgets and go on with 4-12 months 0% interest. It’s very normal to buy things and pay monthly. We don’t see that people who do that don’t have enough money, we just think of the way to keep cash with us as long as we can while we’ve already possessed and utilized those things.
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That’s very interesting, Completelydisappear. It’s quite true that some of us like to keep our money with us for as long as possible – let it sit in the bank and collect interest. Definitely a good idea if we want to earn more money 🙂 I do notice that installment plans in Asia usually go up to 2, 3 years. Here in Australia, it can go up to 4-5 years.
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Credit cards area a bad, bad thing. Paying in full is always better. I wish I could say I always do what you do… Great post!
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Oh yes, credit cards are horrible, but they help so much with online shopping! I’m sure you spend your money wisely. I’ve been buying quite a bit of shirts online of late…I really should stop, and I think I will 🙂
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This is really true. Im an Asian as well and parents trained me to be thrifty and as if using a credit card is a mortal sin especially if the spender came from a third world country. I wish I’m chinese!
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Exactly. Also, Asian parents are keen on their children saving their salaries when they’ve just entered the workforce and earning steady income. Why do you wish you’re Chinese? If you’re Chinese like me, you’ll always be nagged at by your parents to be thrifty!
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Great article! One question but I know you won’t answer. I work in Manhattan and I have 0 savings. Rent can easily be double my paycheck. You live in the poorest place on earth, you get paid $100 a month and come here and buy cash a million dollar house. Do you really pay any taxes? Just asking because in Europe and the States the government takes all your money. Does the Australian or US government ask how you made that money? I know any people who cannot justify their money but are allowed to buy homes and get green cards. If I bring 1 million in cash and try to buy a house I will end up in prison if I get l am just a regular guy. That insanity drives house prices up and we who are legitimate and lay taxes cannot buy anything. Now if you can answer how you make 1 million, how much tax you paid? 40? 50? How did you justify that money to the US government and what kind of job gives that money. If it’s so easy for a 30 year old that I see here to buy a million dollar house cash then I need to move to china and be a billionaire
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yeah i hate paying by installments for depreciating things. You pay in full then u forget about the pain of purchasing it whereas for Installments, u keep paying on and on long after the appliances, furniture and gadgets start to spoil, look used and worn.
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I am fan of paying in full up front…i have hardly taken any installments in life (the only ones i can remember of is for my apartment and a ring i bought for wife from Macy’s). I feel burden even if i think about not paying fully.
I loved your thoughts here. Thank you for putting this up and helping me learn a bit about Australian culture.
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Same like me. Paying in full upfront, we don’t slug ourselves with debt, and we have one less thing to worry about. You never really know if you can pay the money back.
Thanks for your kind words, Alok. Much appreciated.
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You’re welcome 👍
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