UBC July 2024 - Money

Photo by Pixabay

Welcome back to July's UBC. This month I'm going to be talking about cultural differences between Switzerland and the USA.

Today's topic is money.

After all I live in Switzerland, I am supposed to have tons of it. Or at the very least have a wealth of knowledge about all things finance ;-)

In fact my first real job out of college was for a private bank where we took care of rich people's assets. What did I learn from it? The character of many bankers is corrupted by handling vast sums of money that do not even belong to them. They also want a share, and they are prepared to do a lot for it. Even if it means walking over dead bodies, so to speak. I did not appreciate it. 

Of course this is not only true for people in the finance industry. In any sector, the higher up the hierarchy you go, the more you will find that managers become ruthless, greedy and lacking in integrity. 

I dare say this applies to all countries.

What may be a little different in Switzerland, we like to play it down. Yes, some people live in nice houses, wear pretty clothes and drive expensive cars, but as a culture we don't like to stand out. Not even for being successful.

Is it because we don't want to incur the resentment of the less successful? Do we not want to be a target for beggars? 

In Switzerland we tend to leave rich people alone.

It may be one of the reasons celebrities from abroad like to live here. Another reason is lower taxes, for sure. Plus the gorgeous scenery, of course!

Phil Collins, Shanaya Twain and Tina Turner are (were) among them. This is the entrance to her estate a few days after she died last year after living in the Zurich area for a good 30 years, 10 of  which as a Swiss citizen, by the way. She went through the naturalization process like everybody else, including the interview being held in German. Well done, Tina! 

So what can we say about money? Is it different in Switzerland than in the US? Is it cleaner, because money laundering, haha? 

Let me show you our money. Our currency, Swiss Francs. I bet you have never seen any of these bills. Here goes:

We also have coins for 5, 2 and 1 Franc, as well as 50, 20, 10 and 5 cents. 

That's all nice and colourful. But how much is it worth? 

Swiss Franks	Euros	US Dollars
1.00	1.03	1.10
10.00	10.32	11.00
20.00	20.64	22.00
50.00	51.60	55.00
100.00	103.20	110.00
200.00	206.40	220.00
1'000.00	1'032.00	1'100.00

For some extra fun, in a future post I'll list what you can do or buy with the respective amount of money. Don't be shocked, prices are high in Switzerland.

When I was enjoying my introduction not only into the Starbucks corporate culture and operational standards I also had a chance to work for an actual coffee shop. It was 20 years ago, and I am sure things have changed considerably, but back then this is what happened on a particular Friday: A FedEx vehicle pulled up in front of the store, and of course I thought the driver needed coffee. My coworkers knew better. They were cheering. What was going on?

He entered the store and asked for the manager, to whom he handed a bunch of envelopes. 

So what, he brought the mail, big deal?

The manager proceeded to distribute the envelopes among the employees. I was left out. "Sorry, there isn't one for you, I guess they will take care of you back in your country" he said.

Ohmygoodness! 

Were these actual pay checks? I had never in my life seen one! Ever since I had jobs, my salary had been transferred onto my bank account. Except as a high school student working in a manufacture, there I got a bag full of cash, that was a great feeling.

When I had a chance, I asked my new Starbucks colleagues at the HQ. They confirmed that a good 60% of the employees preferred to get a check rather than having their money directly credited to their account. I was stunned. 

Why would they go to the extra trouble of driving to a check-cashing store, cashing their check there, paying a commission of up to 5% on it and then driving around the world with a large amount of cash? What's more, they had to pay their rent and bills later, so another trip to a money order office? If all this could have been avoided with a salary payment to the bank account, to which the recurring items could be debited by standing order. 

This was 20 years ago, mind you. I am sure this has considerably changed in the meantime, especially after the pandemic. 

Speaking of bank accounts. Back when I lived in California, which was prior to my working for Starbucks Switzerland, as a Swiss person with no work visa it was super hard to open one. Because I was not eligible to work, I didn't have a social security number. No SSN, no bank account. Also: no Credit Score, no bank account.

How was I supposed to have / build a credit history if I was new to the country? We don't even have an equivalent to the American Credit Score in Switzerland I would have been able to refer to. 

In Switzerland we tend to have lower levels of consumer debt compared to the US. Cultural norms and stringent regulations regarding consumer credit and lending practices, which may limit access to easy credit and encourage responsible spending behaviors.

For example, if you are applying for a rental apartment, you will need to prove that you will spend a maximum of one third of your monthly income on the apartment by means of your most recent payslips. Do you want to buy a car by means of an installment contract? The bank that advances you the money will require confirmation from your employer that you are and will remain in permanent employment there. If you are married, your spouse must agree to take out a loan, as he or she is jointly liable if you are unable to repay it. 

In Switzerland, especially in the business world, it is still very common to order by invoice. Depending on the business relationship and order volume, this has a payment term of 10 to 30 days. If payment is not received by then, you will receive a friendly reminder, then a less friendly reminder, and if the amount warrants it, formal debt collection proceedings will be initiated. However, this is not usually effective, as people who have let it get this far do not actually have the financial means and often have to file for bankruptcy. 

And this - a "Betreibungsregisterauszug", an extract from the debt collection register, that says you're not listed, is the only official key figure that is commonly used to sort of prove you're a trustworthy creditor. 

Back to my banking troubles in the US: I don't remember how I still managed. I do remember that I spent a lot of time at a bank in my neighborhood, listening to the poor girl talking to a supervisor on the phone. I had with me my passport and a bank statement of my Swiss bank account showing I wanted to bring a good amount of money into their country, which I was gonna need to pay my rent, utilities and internet service. 

After a long process of handing in many documents, I was the proud owner of an American bank account, complete with a check book! One of the first ones I had to issue was toward the San Diego Police Department. I had parked an inch too far from the curb! Sounds like something that might happen in Switzerland, only that I never had a traffic ticket for something like this in my own country ;-)

By the way, the reverse is not straightforward either: The Foreign Account Tax Compliance Act requires foreign financial institutions to report information on accounts of US citizens and taxable US persons to the IRS, which actually contradicts Swiss banking secrecy. For Swiss banks, this means an increased administrative burden and potential penalties for non-compliance. Some banks have therefore decided to stop accepting US clients. 

I just realized that this would be a post that Roy might be interested in. He's missing from this UBC, isn't he?

Do you like to learn about financial things?