How Much Money Is Enough in Tianjin?

The Swedish group ABBA in the1976 hit entitled: "Money, Money, Money" sang about the apparent bliss that comes with money and the woes of doing without. A decade later Tom Hanks and Shelley long according to www.imdb.com starred in the comedy called: "The Money Pit" telling a troublesome tale of getting overwhelmed with the hassles of homeownership. From entertainment to reality, feeling anxiety of money is fairly common. In fact, for expats coming to China, being here can feel like a money pit.

Expat Expenses

Permit. As many have reported, China has recently changed the policies pertaining to obtaining a work permit (就业证 jiùyèzhèng). Without a work permit, a non-Chinese national can not legally work in China. The work permit comes before the residence permit. That is to say, one must obtain a valid work permit before being able to apply for a residence permit for work purposes. The liability of working illegally in China, including Tianjin is becoming increasingly obvious. An expat from South African reported his fellow countryman was deported for working without the proper permit.

Without a permit, work can be hard to find and harder to keep. In Beijing for example there have been reports of stings targeting companies employing expats without the proper paperwork. Expats from numerous different countries have been forced to go home with financial strain related to working illegally as a major factor. Although not always officially deported, these expats are prone to having problems with the police. In an effort to lower one's profile while working on the lam a common tactic is to avoid big companies and well-known schools. Accepting private work and getting paid in cash seems to carry less probability of getting caught red-handed, though still dishonest and fraught with legal liability. The trouble is, managing a book of private clients is more complicated and usually far less profitable when compared with showing up at one place and getting paid a flat rate. Expats being unable to easily obtain legal rights to work in China and a steady paycheck is one reason why living here can feel like a money pit. All too easily, plenty of money is going out, but relatively little is coming in.

Agencies. Expats working illegally lament, it is either feast or famine. During the busy season they are booked morning till night as tutors. Then comes Spring Festival for example, and they can't find a student for the life of them. Some choose another rather risky tactic of paying an agency for a work permit. On the surface this may seem like an option to work legally, except usually these agencies are shady and in the face of an investigation the expat will still be in big trouble. There is the possibility of fine, imprisonment, and deportation for working illegally. Being unable to make money freely is a top sore spot when it comes to expats. Keep in mind, those shysters offering work permits for a fee usually demand huge sums of money up front. This too puts financial pressure on an already cash crunched expat. Sad to say, all too often expats end up working illegally either to save money on outrageous agency fees, or simply to make ends meet after school stipend, savings, or money from parents runs out.

Inflation. In addition to challenges faced with obtaining a work permit, expats are not exempt to inflation. It certainly seems that the cost of everything is on the rise. Not only that, expats may find themselves feeling alone as they fight a financial battle against a family or families. How so? In the course of asking local Chinese about how much money is enough to live a comfortable life, two things became readily apparent. One, it was hard to get a straight answer. Two, almost all factored in family assistance. The biggest, and most obvious help from family came in providing a home. Indeed, expats need a place to lay their head down just like a local. The catch is, expats must find their own place to live whereas locals frequently rely on family or friends for lodging.

A girl from Henan living in Tianjin has access to two homes thanks to her husband and in-laws. Another Tianjin man has his own home because of help from his parents too. In fact, since his home is in Heping district (notorious for high rents), he actually rents out his home and then lives in a cheaper rented home himself. This way he is double dipping. He gets to pocket some rent income while at the same time his home appreciates. Virtually none of these opportunities exist for expats. A real estate agent at Lianjia (链家 liànjiā) stated expats are allowed to buy only one home in China. That means, foreigners flipping houses or relieving housing stress by buying multiple homes isn't even possible. Not to mention, current home prices in Tianjin far exceeds what the average expat could ever pay. Which is why most expats living in China fail at being considered rich in a Chinese person's eyes, namely, they don't own a home! See this months business article for further discussion on how culturally speaking there is quite a gap being Chinese and non-Chinese when it comes to defining what it means to be rich.

How much money is enough in Tianjin? Research indicates a significant gap between locals and expats when responding to this question. Virtually all the locals asked struggled to give a specific monetary amount. Expats though, seemed quite clear on an amount needed to get buy both in China and back home. The biggest caveat came in locals almost automatically factoring in having a home provided by family. Therefore, the amount of money they considered enough to get buy was based on already having a place to stay. This is exactly opposite than an expat, who usually is facing a huge expense when it comes to housing. Not only that, but in most cases, the standard of living an expat is looking for exceeds that of a local. The most obvious difference comes in terms of privacy. In Beijing it is almost standard issue for non-Beijing residents, that is a Chinese citizen who doesn't have permanent residency in Beijing (i.e. 户口 hùkǒu) to rent a room and not an entire apartment. The kitchen, bathroom and living room are all shared. The only privacy someone may have is the bedroom they rent. Of course, in some cases, not even that. As there are those that will even share a bedroom to further reduce rent. Another popular choice is what amounts to a small hotel room for rent. In these scenarios, a shared rental or shady studio could get rent down to 1,000-3,000 RMB/month per person in Beijing. When it comes to expats though, not only could accepting such a living arrangement be challenging, but maybe not even an option. Why?

You need a valid work permit to legally work in China.

When it comes to shared housing, some landlords seem rather unsure about renting a home to a group of expats, especially if they are from different countries, or are not blood relatives. Plainly stated, a prejudice against renting to foreigners does exist. It isn't always as simple as an expat finding a place they like and renting it. It is prudent to either state up front personally, or have the agent do so, that the tenants are expats. Confirm that expats will be accepted as tenants before wasting time on seeing a place, let alone falling in love with it. Thankfully Tianjin has way better rent prices than Beijing, but still not cheap. Over the years, especially in recent times, Tianjin rents are on the rise! With the CPC (Communist Party of China) strongly motivating, even mandating in some cases, people and businesses to leave Beijing, Tianjin becomes an obvious choice. Especially as the Tri-City Integration (京津冀一体化 Jīng Jīn Jì yītǐhuà) continues to pick up steam, more people are moving to Tianjin. This of course creates greater demand for housing.

From an expats perspective, back in the so-called day, renting a decent flat in Tianjin may have been possible for around 2-3,000 RMB/month. That place in some cases would be in the city-center, have multiple bedrooms and a decent size living room. Fast forward to today, and that same amount of money will get way less. Many expats have been forced to downsize or move outside the city. In talking with a number of expats, their China budget has needed to expand significantly. For example, an Australian expat used to rent a two-bedroom, one bath, approximately 100 square meter flat in Nankai for 2,500 RMB/month. Now that same money gets a much smaller one-bedroom or studio. Before complaining, remember expats next-door in Beijing. For probably what is an older, smaller one-bedroom or studio try swallowing 5-6,000 RMB/month!

When talking to expats, getting a straight answer when it comes to how much money is enough in Tianjin was fairly straightforward. Asking the same question to countless Chinese people had just the opposite result. It was usually a lot of him-hawing around and nonspecific responses. Except for one point, the house was almost always taken care of thanks to their family but not without consequence. It seemed virtually unthinkable to sell the house and use the money to live freely. This means, yes, they have a house; but, no, they can't cash out and travel the world. Tianjin culture requires the family to provide their child with a house, especially when it's a male. Which puts the amount locals might think is sufficient to get by on in stark contrast with an expats budget. Not to mention, two or three generations of a Chinese family will work together to buy a house versus an expat being left on his good old lonesome to try and face massive housing pressure. One Tianjin male fessed up and said it would take about two million USD to set oneself up comfortably. The majority of this money would be used for housing, something that could easily be in the one-million USD range. A number which is absolutely staggering to the typical expat. A Tianjin girl who moved to Australia shows that the Chinese view of money isn't limited by geography. Namely, they are very comfortable investing huge amounts of money into buying real estate. Her and her husband bought a 400 square meter home in the land down under. The mortgage is a whopping 4,600 AUD/month (c. 3,500 USD/month). Yet, she felt that was nothing in compared to what it would take to buy the same size home in Tianjin. According to online estimates, some communities have homes selling at 30,000 RMB/square meter. Thus, a similar property would cost about two million USD! So, how much money is enough, greatly depends on housing.

Keep making money

Based on budgets provided by various expats, these days living in China is anything but cheap. Plan on 1,000-3,500 USD/month. At 1,000 USD/month, chances on it will be either a studio apartment or shared living and local food. Indulging in imported treats is another massive expensive for expats. Unless one is ready to completely adapt their palates to Chinese cuisine, be ready to pay the price. It should be noted though, some expats who have tried to save money by eating super cheap in the long run have spent more in medical costs and lost work. Street food and instant noodles are cheap. Yet time and again, the long-term repercussions outweigh the short-term financial rewards.

Wealthy Woes

Excess. Two of the richest men in the world are Bill Gates (比尔 · 盖茨 Bǐ'ěr · Gàicí) and William Buffett (巴菲特 Bāfēitè). Bill Gates aged 62, is reported to have over ninety billion USD. However, he and his wife, Melinda have made a bold decision to give back his wealth through the Bill and Melinda Gates Foundation. Bill Gates is one of the founders of Microsoft and was ranked the richest man in the world for a number of years until 2017 when Amazon founder Jeff Bezos surpassed him and Buffet. In a similar fashion, William Buffett aged 87, with his eighty-six billion USD has committed to donate over half of his wealth into a foundation founded by him and Bill Gates in 2010 called "The Giving Pledge." To date there are 175 signatories in this foundation from 22 countries, with pledges of over three-hundred and sixty-five billion USD. China's richest man is listed as Pony Ma (马化腾 Mǎ Huàténg), aged 46. He is founder and CEO of Tencent, one of the largest internet and technology companies in China. His wealth is estimated to be fifty-six billion USD. It will be interesting to see how China's wealthy deal with their excessive wealth. Will they choose to give it away as well? These charitable giveaways indicate their massive wealth is actually excessive, far more than they themselves actually need. Ironically, after spending a lifetime to amass the money, they end up feeling a need to give it away.

Greed. Other ridiculously rich people include those who win huge sums of money from a lottery. Yet, these massive winnings still don't seem to be enough, as some lose it all and go into debt. Individuals who lived a relatively simple life before becoming wealthy were soon dogged and harassed by friends and relatives trying to get their share of the newfound wealth. Greed can be the culprit to such trouble.

Health. Fred, at the age of 60 had become a successful businessman. Having immigrated to Canada from China with nothing, he had a thriving retail appliance outlet catering to the local Chinese community. Then he invested in property and opened a registry, a business which enabled the public to visit one office and register government documents for various purposes. Then one day he complained of chest and shoulder pains. He visited his doctor hoping to find some quick relief and get back to work. He usually worked 10-12 hours a day, six days a week, taking Sundays off to play mah-jong (麻将 májiàng) all day with friends. To Fred's shock, the doctor said: "You're not going anywhere. I'm checking you into the Emergency Ward right now." He suffered a heart attack that very night and had to undergo a triple bypass operation in order to save his life. While recovering in the hospital, the doctor said he had a choice: "His money or his life." Fred was working himself to an early grave, sacrificing health for wealth via a lifestyle of work, stress and smoking. The heart attack that almost killed him in turn saved his life. He sold his businesses and changed his schedule, spending more time with his children and grandchildren, traveling with his wife and friends. That was 20 years ago. He recently even bought a piano to pursue his love of music.

This realization is starting to occur in some Chinese. The emphasis on quality of life rather than the previous desperate desire to accumulate wealth at all cost. On a recent taxi ride from the airport, the cab driver winced when a Canadian expat said the destination was Wuqing, a 200 RMB fare. When asked why he wasn't happy, the cabbie indicated it was a long way and he lived in TEDA. He had been preparing to wrap up for the day, having already met his target earnings of 300 RMB. Most days he only drives 6-8 hours, rhetorically asking "why kill yourself?" He also said many drivers have their own homes and some with more than one. So, they have extra income and do not need to drive 12-14 hours a day like in the past. Some choose not share their vehicles with a second driver in order to maximize revenue from one vehicle. Cabbies seem to want a more leisurely life and enjoy taking one or two days off.

Bill Gates and Warren Buffet co-founded a foundation to donate their money.

Retirement

Some experts claim that by setting aside 4% of income from the age of 25, one can easily retire by 50. Sounds easy but isn't really. Many seem to do the opposite with using credit and borrowing, resulting in owing more than they save. Governments provide old age security programs and usually larger companies have retirement funds. However the government programs are very minimal. Often one needs to supplement this with other savings or investment income in order to maintain a certain lifestyle.

In the West, retirement usually begins at age 65, contrasted by China, which sees retiring age as 60 for men and 55 for women. Keep in mind that increased life expectancy is affecting this. It is not uncommon to see western workers in their 70's. Go to any Wal-Mart overseas and chances are an elderly greeter is at the front door. If they did the same in the China Wal-Marts, there might be an outcry of criticism against abusing old people. Preparing for retirement is like landing a plane. Ideally it is a gradual process and not a sudden crash. Gradually preparing for the retirement "landing" includes having a targeted destination well in advance. Likewise, chances are most don't get a redo. One has to plan for retirement as there will come a time when physical work is impossible. Thus, some consider it wise to set aside funds for that inevitable day.

Prepare for your retirement finanically.

There are retirement funds that can be contributed to during working years. Others reduce expenses after no longer earning an income. Housing in China is a top expense, so many try to avoid paying rent by owning a home. Overseas a housing scheme is buying into a retirement home. These projects are meant for the elderly and have complete cafeterias, health clinics with doctors and nurses and group activities such as bingo, lectures and movies. Some even have a bus and provide group outings for the day. Another option is a reverse mortgage, which is a type of home loan for older homeowners that require no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's insurance. Reverse mortgages allow seniors to access the home equity they have built up in their homes, and defer payment of the loan until they die, sell, or move out of the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower (or the borrower's estate) is generally not required to repay any additional loan balance in excess of the value of the home.

A potential economic drain for the elderly is medical expenses. Ideally one can prepare for these potential costs. The best remedy is to establish a healthy lifestyle and reduce medical problems, but the unexpected issue always seems to pop up. Having insurance available, either medical coverage or life insurance or both may be advisable. Get policies while young and premiums are reasonable. Don't wait until over 60, when premiums will be higher and sometimes not available. Life insurance can provide equity and cash once the policy matures, plus payments to beneficiaries is a form of inheritance. It is wise to prepare a will in order to clearly define how assets will be distributed.

A major difference between East and the West is the attitude of leaving behind an inheritance. Chinese culture regards leaving an inheritance to family as very important. Even during life, Chinese parents are usually financially supportive of their children; perhaps more so than in the West, where children may be more independent at an early age. A bumper sticker seen in Canada during the holidays on a very large extravagant motorhome, read: "We are spending our children's inheritance!" In China, the tradition though is to accumulate wealth and leave a legacy. Face plays a role right to the very end.

Conclusion

The answer to "how much money is enough?" seems to be:"It depends." It depends a great deal on individual lifestyle and expectations. Expats coming to China are probably looking at anywhere from 1,000-4,000 US/month to get buy. Locals may be able to survive on much less thanks to shared housing or accommodations provided by family. Not to mention, they can work virtually anywhere and in any position versus expats being required to jump through an increasing number of hoops to be granted the privilege of legally working in China. For some, no amount of money is enough. No matter how much they accumulate, they still want more. John Paul Getty who is listed as America's richest person in the 50-60's was so frugal that he installed a pay phone in his home to save money by having guests pay for their own phone calls. Remember, no matter what is amassed, it can't be taken with you. Humans need to achieve a balance in life. Ideally this means having sufficient funds to get buy and enough health to enjoy it.