Monday , July 15 2024

Young people overspending big time in Vietnam

Uyen had to borrow VND5 million (around $212) from her friends to pay for her appendix operation. She’s been working for years, but has been unable to save.

The 28-year-old office worker in Ho Chi Minh City isn’t in Vietnam’s low-income group because her monthly salary is around VND20 million.

But she spent VND12 million on a designer bag after getting paid last month, another VND3 million on rent, and VND4 million on a private training kickboxing course.

“The operation cost was unexpected, so I had to borrow money from my friends to cover it,” she says.

Uyen says she often suffers from fear of missing out (FOMO), so she spends almost all of her monthly income hanging with friends, buying cosmetics, purchasing bags and clothes, and traveling. Because of that, she doesn’t have any savings.

She justifies her spending because she wants to be a modern woman who “works hard and plays hard.”

The fact that she’s unmarried and that her parents’ have pensions helps her feel comfortable in this unplanned lifestyle.

“We only live once so why do we have to calculate our spendings and waste our youth?” she says. “There have been months when I spent twice the amount of my salary, but I’m not worried, because I can always borrow money from others.”

Uyen during her trip to the Central Highlands with her friends early-2023, on which she spent more than a half of her monthly salary. Photo courtesy of Uyen

Uyen during a trip to the Central Highlands with her friends early-2023. She spent more than half her monthly salary on the trip. Photo courtesy of Uyen

Thirty-year-old Tung of Hai Phong City used to live a carefree lifestyle. Unlike his friends, he didn’t have any plans to purchase a house, a car, or to have a wedding ceremony, and thus, never thought about saving money. He spent all of his 30-million-dong salary on his hobbies every month.

Priding himself on being tech savvy, he regularly updated his mobile phones and game consoles. His clothes were all from designer brands – his cheapest items cost him millions of dong. He spent between VND500,000 and around VND1 million eating out with his colleagues every day.

“I didn’t want to live like my parents, who had to give up on their dreams and hobbies to save every cent they made,” he says. “I want to spend the money I make on the things that I like.”

Uyen and Tung are just two of many young people who have no savings despite earning above-average monthly salaries. They are the “You Only Live Once” (YOLO) generation.

Dr. Trinh Thi Phan Lan, a professor at the University of Economics and Business at Vietnam National University, says that the term “YOLO” originates from “The Motto,” one of Canadian rapper Drake’s songs. The song encourages its listeners to live to life to the fullest everyday as everyone has only one life to live and no one can change the past.

“However, many young people misunderstand the message of the song, and thus they waste all their money,” she said.

She says the younger generation right now makes more money than previous generations. She says contemporary society is more consumerism-oriented and people think their appearance defines who they are. People nowadays rely on proving themselves on social media, rather than on their sense of knowledge, their interests, or their financial well-being, she says.

Finance expert Phan Dung Khanh acknowledges this and adds that based on his observations, the current younger generations, especially generation Z, is spending more superfluously than their older counterparts.

In a survey taken by VnExpress on June 16, around 10% of respondents answered “Yes” to the question: “Have you ever borrowed money from your family members, friends, or loan companies due to lack of savings?”

Young people in Vietnam are increasingly willing to spend more on clothing, electronic devices, and personal hobbies. Photo illustration by VnExpress/Anh Tu

Young people in Vietnam are increasingly willing to spend more on clothing, electronic devices, and personal hobbies. Photo illustration by VnExpress/Anh Tu

Experts say this spending style can bring young people temporary feelings of happiness and confidence, but it also causes long-term financial consequences, including the inability to support oneself or family members when in need or in debt.

“If you are young and still single, you can be more carefree financially. But you have to be prepared for unexpected expenses, especially after marriage,” Lan says.

“From costs for maternity and children raising to spending on parents’ caretaking and even for your own old age. This will be a burden if you don’t prepare in advance.”

Backbase’s 2021 report “State of Banking and Financial Wellness” report pointed out that around 67% of Vietnamese people consider themselves under financial pressure.

The proportion of people in Vietnam who admit they’re not able to manage their own financial resources was highest of the 10 countries surveyed. This lack of knowledge about financial management causes many people in this group to panic easily when problems arise in life.

Tung is a typical case of this phenomenon. He had no other choice but to change his lifestyle when he was laid off due to the pandemic. He had to pawn his technological devices and sell his expensive clothing to cover his living expenses. He was too embarrassed to ask for financial help from his friends and his parents could not support him either.

Lan suggests that everyone should learn about financial management, including how to earn enough money, how to save, how to invest, and how to manage their properties. They should also learn about insurances, securities, and pension allowances. They should seek advice from a financial planner if needed in order plan wisely for having children, studying abroad, or taking care of elderly parents, financially.

Lien, 29, from the northern province of Nghe An, used to pursue the “spending more than earning” lifestyle. She wanted to eat good food, dress nicely, and enjoy her life.

Things only began to change when she found herself asking everyone she knew to borrow VND40 million to cover the hospital fees of a relative of hers who got in a traffic accident.

“I changed when I felt hopeless and embarrassed and had to borrow money from others to support my family despite having a stable job,” she says.

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