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When dealing with foreign culture, a lot us of frequently make the mistake of assuming that things are the same way there as they are in their own country. Even after years of living in US, I find myself falling into this trap time and time again. You won’t be able to completely escape this trap, but if you use my curious collection of comparisons of a typical American and a typical Russian on the subject of money spending, you will have a better picture of where their money goes.
Ипотека or кредит на недвижимость (mortgage or loan to purchase property)
In America, the idea of taking out a mortgage and buying a property is pretty much introduced with mother’s milk. The very same idea has been introduced to the Russian market only about 10 years ago. However, the process of taking out a loan and purchasing property is still out of reach of most Russians, according to Vedomosti. This is due to unfavorable loan terms: typical mortgage rates are about 15% and typical mortgage term is 15 years compared to typical US mortgage rates of 4-5% and a typical term of 30 years.
Дом (house) or квартира (apartment)
While a typical American residence is a house (with or without the white picket fence :-), a typical Russian residence is an apartment. Inability to purchase real estate due to lack of income and unfavorable lending terms results in parents sharing their quarters with children for quite some time. In many instances, you will see two and three generations living together in one apartment.
The room count in a typical Russian apartment is not conducted by counting bedrooms, but rather by counting all rooms with the exception of the kitchen. That means if you were told an apartment has 2 rooms, it literally has TWO rooms, plus the kitchen. A lot of Russians inherit their property from their parents, grandparents, or have received it from the government or their employer many decades ago.
A typical Russian person has about 2-3 good sweaters, 2-3 decent pairs of pants, and a couple of shirts/tops/dresses. A fairly small selection of clothing and particular care for what you have is explained by the high prices on clothing in relation to the income. An average Russian consumer (an equivalent of JC Penny, Forever 21, Kohl’s, or Gap customer) will have to pay between $35-60 for a sweater and $40-100 for a pair of jeans and $50-150 for a pair of shoes. With seasonal sales and clearance in their newborn stage, clothing takes out a decent chunk of an average Russian person’s budget. A typical American closet consists of about 10 pairs of pants, 5-10 sweaters, 10 tops/shirts, 5 dresses, 3 coats and 5-10 pairs of shoes – usually made possible by end-of-season sales, holiday sales and, sometimes, clearance. While you may pay the same amount of money for clothing in America as you would in Russia, you are spending a much smaller portion of your income, considering the averages in both countries.
While groceries in many categories are somewhat cheaper in Russia, when you compare the food prices in relation to the average monthly income, groceries put a significant dent in both an average American and average Russian budget. What varies thought is the food variety, grocery store size and the amount of trips to the grocery store. A typical American supermarket has an enormous amount of processed foods. While Russia is also on its way there, it cannot currently match the brand variety and, therefore, does not need stores of that size. Pedestrian life style of most Russian people also dictates how grocery shopping is conducted. Russian people usually stop at the store 1 to 2 times a week buying enough to last for a few days. Processed and frozen foods are becoming more and more popular in Russia, but most people still cook their own food.
We all know that healthcare in the US is not free 🙂 but is considerably more advanced, at least in my opinion, than healthcare in Russia. Russian healthcare is provided by the government and is available to all citizens somewhat free. Private clinics also exist but they are out of reach of most people. While the question of healthcare, its cost and quality is a very complex issue, I feel compelled to provide a couple of examples on the subject from my own life .
A few years ago I was visiting my family in Russia with my three year old son. Sometime on Friday he started showing signs of a cold/virus. I didn’t think much of it. But then on Saturday evening, my son was in bed with a fewer of 105-106F. I was frantic. My father said we should call an ambulance. With my hands shaking, I dialed 03. In about 20 min, ambulance showed up and in came the doctor. She examined my son, gave him a shot, waited for about 20 min to see how he was doing, instructed me to buy antibiotic (which you do not need a prescription for, by the way), chewed me out for not calling the ambulance earlier and left. I got the medicine, and in the next two days my son was back to his cheerful self. Before I go any further, let me just say that I would have called that ambulance no matter what because you cannot put a price on my child’s life but, nevertheless, what was the price I paid for the above described incident? The price was $0.00. I did not have to pay a dime for the life-saving services that were provided.
A few years later, while I was working at a bank here in US, I had a chance to hear a horrifying story. One of our security guards was an elderly gentleman, who lived with his single daughter and little granddaughter. One day he did not come in to work. We found out later that it was due to the fact that his daughter passed away. His daughter, who was a struggling single mother, passed away due to complications from strep throat, of all things. Her fear of what it would cost her to get necessary treatment prevented her from visiting the doctor. After a few days of agonizing fewer, she passed away from an easily treatable condition, leaving her small child in the care of her elderly father.
The reason I decided to include these examples in this post is to illustrate that neither system is perfect and both need serious improvement. Maybe meeting somewhere in the middle wouldn’t be a bad idea.
To summarize, here is my perception of how a typical American and a typical Russian expenses break down in order of importance.
Typical Russian person:
-rent (if any)
-other loans (mostly electronics, household goods, furniture, sometimes vehicle loan+gas, etc.)
-clothing, recreational spending
less money + less debt = pretty tight noose
Typical American person:
-rent or mortgage (applies to most people)
-other debt (credit cards that are used for anything and everything, healthcare bills, student loans, car loans + gas, etc.)
more money + more debt = even tighter noose
In conclusion, I would like to pose the following question: на что у Вас уходят деньги? (where does your money go?)
I look forward to what you have to say!