Money Lessons from 2 Countries - Chapter 4

After talking about college education and the cost of it, and credit cards and other credit tools that are available more in the US than in Romania, this week we will talk about the way to earn money through work and investments.

I grew up during a time when all employees were paid in cash - in fact, my mother worked in the department that was in charge of giving out the wages 2 days a month. I remember my mom bringing home new bills, and then exchanging my savings to new crisp bills - the higher the value, the better. I have talked to many American friends who have memories from their childhood regarding saving money, and many of their stories are similar to mine. The main difference is the time of the childhood. My American friends talk about the 1960's and 1970's while my memories date from after 1985 - guess Romania was a little behind in adopting the plastic and the ACH as a method of collecting wages.

During the communist regime, we only have a central bank in the country and all the savings went there - building up a small interest for staying parked in the account. I remember taking a long time to collect an amount that I liked looking at and dreaming about. The system was set up in an artificial way that limited the inflation, therefore the value of money didn't go down much over time.

As soon as the Revolution changed the financial system in Romania - among other things - the inflation hit full force and many Romanians (including me) saw the value of the savings accounts shrink. the new "fashionable" savings accounts became the ones in foreign currency. This was quite profitable for a time - until the interest on in became so low that it lost all its appeal. The main challenge for the Romanians came a little later, when the banks caught on with the appeal of making more money from foreign currencies and started offering loans in foreign currencies. I have friends who are still struggling to pay off loans taken out in Swiss Francs many years ago.

From my experience with the financial system in the United States, I learned to appreciate the stability of the national currency that maintains the values of loans as well as savings on a level that can be easily understood. Since the banks make profits by trading money, the interest on savings is always lower than the interest on loans. This makes sense on a logical level, however much it affects the average Joe or Jane who is trying to make their money work for them. 

For now, I will stop the stories of my 2 countries. Next month we will be talking about money tips that can help you keep more of the money you make.

Money Lessons from 2 Countries - Chapter 2

We talked last week about the differences between the school systems in Romania and the US. I would like to take this post to go over some other differences within the school systems, as well as the life of the students and their families during this period.

As I mentioned, during the communism, every high school graduate was offered a job - not one that required a lot of specific training or a certification, but still a job. Also, at the time that everyone graduated university, they were offered a job in the field of their studies. For instance, doctors, teachers and engineers ended up with jobs in their field - the only "catch" was that they went to very small cities and especially in villages. The only way for them to be in a big city or close to their hometown was to ask for favors or to bribe someone.

By contrast, after the revolution, just like in the United States, many of the graduates from different universities work in jobs that are different from their field of study. Also, with the increase in new universities after 1989, there are a lot more graduates than before. With all the changes that came with the revolution, the high school graduates had more options for university, and therefore many attended classes in fields that they were not passionate about, such as going to law school - similarly with many American students getting a degree in criminal justice.

While growing up both during the communist regime and afterwards, in Romania, teenagers and college students didn't have an opportunity to work - without the fast foods and grocery stores, like the big chains in the US, we didn't have a chance to earn money and have entry-level jobs that show up as "experience" on a resume. I still remember how hard it was after graduating college when I started looking for a job and everyone was asking me about experience. Yet nobody would hire me to give me the "experience" they were all requiring. 

I guess in this I always considered the students from Western Europe and the United States as fortunate to be able to achieve a certain level of financial comfort by providing the cash they needed for the things they wanted through their own jobs and efforts. As a funny side note, I also didn't grow up with an allowance, so I didn't have a "weekly wage" as a child, with which to make plans for things to buy. I always had to earn the money I wanted by maintaining good grades - which was not a hard thing for me (fortunately). 

Going away to college gave me an opportunity to manage my money while making sure I could buy the things I wanted while also having money to go home every time I wanted. For many Romanian students college is the first chance to leave home for a number of years and become independent (or at least depend on the parents less). What happens many times after graduation though, is that the graduates return to live with their family for a while longer - unless they find opportunities for work (most often out of the country). 

I used to think that the American and Western European systems, encouraging their youth to move out form their parents' homes in their late teenage years, was such a great set up. I longed to be independent back in my adolescence...

We will explore some of the other changes in the next weeks. Stay tuned!