China’s largest young living paycheck to paycheck

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Eric Hsu remembers a time when he was 10 days away from payday and only had $32 left. He had no savings.

“I used the money I had left to buy loaves of white bread and ate that for all three meals until my paycheck came in,” he told CNBC Make It.

“Sometimes I would think, I earn very little, I would think I earn an upper middle income salary. But I still feel very poor every month.”

Hsu belongs to a group of people in Taiwan, usually young and single workers, called the “yue guang zu” – known as the “moonlight clan.”

The quote describes being broke at the end of each month, or as Hsu describes it, “Money comes in from my left hand and out from my right.”

This behavior is very different from their parents, who saved literally every cent they have.

Chung Chi Nien

Hong Kong Polytechnic University

The term originated in Taiwan but is now often used in mainland China and Hong Kong to describe the younger generation, said Chung Chi Nien, a chair professor at Hong Kong Polytechnic University.

It is estimated that 40% of young single people living in Beijing, Shanghai, Guangzhou, and Shenzhen live paycheck to paycheck, according to a local report.

“This behavior is very different from their parents, who saved every hundred percent they have.

The rising cost of living has put more individuals at risk of being in the “moonlight race,” especially those with low incomes, Chung said.

While Taiwan’s inflation rate of 2.4% is much lower compared to many parts of the world, consumer prices and food costs are still rising.

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For 34-year-old A-Jin, fixed costs such as insurance, utilities and transportation already take up “more than half” of her salary of 30,000 New Taiwan dollars (about $985) a month, she told CNBC Make It.

“I would be left with NT$10,000 a month for food and other expenses. Eating out now costs about NT$300 a day. There is no way to save,” said A-Jin, who works in the service industry.

“If I had an emergency, like a car accident – I wouldn’t have any money to deal with.”

Not just inflation

But for others, it’s the “you only live once” mentality that motivates them to spend as much as they can – even if it means taking on debt.

Ever since Hsu started working 10 years ago, the civil engineer struggled to accumulate any savings as he tried to pay off his student debt.

“Instead of saving the money I had left at the end of the month, I decided to pay my debts instead,” according to a CNBC translation of his Mandarin comments.

I let him out and he was like, since I have a credit card, let’s buy a car while I have it.

But when a serious knee injury took him out of work for two weeks without pay, Hsu realized he couldn’t support himself.

“I thought, since I can use a credit card to pay for things and make my life easier, why not?”

But before he knew it, he had as many as four credit cards and nearly 70% of his monthly salary was going towards paying off those debts – leaving very little left for savings.

Hsu admitted that while half of his debt was for essential daily expenses, the other half was incurred due to “lifestyle choices and desires.”

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“I let it out of his hand and he was like, ‘since I have a credit card, let’s buy a car while I have it,'” said the 38-year-old Hsu.

“With online shopping, you’re also exposed to a variety of things you can buy and the fact that you can shop so easily didn’t help.”

‘A small pleasure, but very sure’

The concept of “moonlight generation” reflects the unhappiness young people feel about life today, said Chung, the professor. It is very similar to other terms that have become popular in China in the past two years, such as “tang ping” and “bai lan.”

“In the context of East Asia, the parents of the moonlight race have experienced very successful entrepreneurship and achieved their goals in life,” he said.

“But that’s a different reality for this generation … they see their parents’ success, but they can’t achieve it. There’s a big gap between expectations and reality.”

The “moonlighting crisis” exists mainly because homeownership is no longer possible for young people in Taiwan – due to a lack of affordable housing, Chung said.

It could be anything from buying a cup of coffee from Starbucks, to going on a trip abroad – things that give you a small sense of happiness to compensate for the complete loss of purpose in life.

Chung Chi Nien

Professor, Hong Kong Polytechnic University

According to UN Habitat, housing is considered affordable when the house price-to-income ratio is 3.0 or less.

In comparison, Taiwan’s current ratio is 9.6 and 15.7 in Taipei city, according to the Ministry of the Interior.

“The prospect of buying your own house, getting married and raising your own family is now far too far away,” Chung said.

“Young people would rather give up that dream and spend money on things they are sure they will get today.”

These things are called “xiao que xin” – which means “small, but very sure happiness” in Mandarin.

“It could be anything from buying a cup of coffee from Starbucks, to going on a trip abroad – things that give you a small sense of happiness to compensate for the complete loss of purpose in life,” Chung told CNBC Make It.

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Hsu agreed, sharing a common expression in Taiwan that describes the current situation: “Houses are not for living, but for investment.”

“Three bedrooms now cost NT$20 million. How long do I have to save with my annual salary of NT$720,000?”

“You would only really do something if you have a strong goal. Without the opportunity to buy a home, it’s like, ‘There’s no point in making money if you don’t spend it,'” he said.

No long term goals

A-Jin said she has no long-term financial or life goals and has “completely given up” on buying her own home.

“As long as I have food to eat and my stomach is full, I will not die. That will be enough for me,” she said.

“Since everything else is impossible, I just think about how I can be kinder to myself, that’s it.

For Hsu, he believes that the most difficult days are behind him. After gaining experience, he canceled his credit cards two years ago and pledged to save a third of his salary each month.

Not knowing if you have enough money for food until the next payday is a very scary situation to be in – but that’s what I did myself and the punishment fits the crime.

However, he still considers himself part of the “moonlight clan” as he is still unsure if he would survive another crisis.

“I don’t have any long-term financial goals yet… My priority is to clear what’s left of my credit card debt. I’m just driven by the fear of starving again,” he said.

“Not knowing if you have enough money for food until the next payday is a scary situation to be in – but that’s what I did and the punishment fits the crime.”

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