Americans can learn a valuable financial lesson from our German friends. It’s that financial culture, a deep-seated aversion to debt and an emphasis on responsibility. This attitude shows up in all walks of life from the daily trip to the grocery store to putting a roof over your head.
The German economy is so reliant on cash for transactions small and big, a way to ensure you don’t spend more than you have, that Germany pushed hard for the euro500 note to replace its popular 1,000 mark bill when it joined the European common currency (the Euro).
Germans tend to be instinctively averse to taking out a mortgage. And lenders often demand a 20 percent down payment on a house or substantial collateral. So a culture has sprung up of just renting and holding on to cash.
The German aversion to debt also translates to credit card use or I should say non-use. Only 36 percent of Germans over the age of 15 even possess a card, compared with 62 percent in the U.S. according to World Bank figures. And even when Germans do have a card, the limit is usually tied to a customer’s bank balance and the bill is automatically paid off in full from the customer’s account within a month or so.
Germans today save 11 percent on average but that’s still much higher than less than 6 percent in the U.S. or 6.5 percent in Japan.