The economy is volatile. Why is managing finances essential right now?

Since the global COVID-19 crisis and market instability, many people have realized that personal finance is not something to be left unmanaged. We need to plan thoughtfully if we want to feel economically secure in the future because “financial control” is about directing our lives, not letting life flow along passively.

The Meaning of Personal Financial Management

Financial planning is not as complicated as it seems. It is a process where we consciously decide how to use our money to ensure a stable and sustainable future. This includes managing existing assets, planning income and expenses, and setting clear economic goals.

Simply put, it’s like planning a trip — we need to know where we are now, where we want to go, and how to get there. If we want to return home, we have multiple options, but we must choose the best one for ourselves. The same applies to financial repair.

Reasons to Pay Attention to Financial Planning

1. Hope for a long life but money runs out?

Advances in medicine have allowed people to live longer. According to statistics, the average life expectancy for Thai men is 71.3 years, and for women, 78.2 years. However, sadly, only 25% of 100 retirees have enough money to last after retirement.

Let’s think like this: if retiring at age 60 and needing 30,000 baht per month until age 80:

• 30,000 × 12 months × 20 years = 7.2 million baht

This is a simple estimate, not accounting for inflation. If you want to live until 100, the amount needed increases further. Are you prepared today?

2. Society is changing, children can’t fully help

Thailand’s population is aging, with over 10% of the population over 60 years old. Meanwhile, the younger generation is having fewer children; typical families now have only 1-2 children due to rising costs.

As a result, relying on children in old age is no longer fully feasible. About 55.8% of the elderly still depend on others. Therefore, self-reliance is the only sensible choice.

3. Inflation is squeezing prices up

A plate of rice was 5 baht twenty years ago; now it’s 40-50 baht. Noodles that cost 10 baht are now 40-50 baht per bowl. If we think 30 years ahead, the money we save now will be worth only 30-40% of its current value. That’s why money must be invested to keep pace with inflation.

4. Are government welfare benefits enough?

In 15 years, the population over 60 will increase to 20% of the total. Meanwhile, the ratio of working-age people to elderly will drop from 6:1 to 3:1, making government tax revenue insufficient.

Old-age allowances of only 600 baht/month and social security averaging 3,000 baht/month are not enough. Definitely not enough. Preparation must start now.

5. More investment options, but more complex

In the past, depositing money in banks earned good interest. Our parents’ generation had disciplined savings. Today, bank interest rates are at historic lows (1.00% - 2.00%). Saving in banks alone is insufficient.

The market offers over 726+ stocks, more than 1,537 mutual funds, plus bonds, life insurance, property, and more. There are many channels, but understanding the risks of each is essential. Education is a must before making decisions.

6. Save early, get rich faster

People who save consistently from the start of their careers have four advantages: saving discipline, principal amount, good returns, and time.

Compare:

Mr. Saver vs. Mr. Non-saver

• Starting savings: 10,000 baht (each)
• Monthly savings: 5,000 baht vs. 0
• Duration: 15 years (180 months)
• Annual return: 5% vs. 1% (bank)
• Results: 1,357,582 baht vs. 11,607 baht

The difference is enormous!

7. Prepare for unexpected events

Life is unpredictable. Serious illness, job loss, or sudden income loss can happen. Having insurance and emergency funds can significantly reduce financial burdens.

During the COVID-19 era, many families lost breadwinners, leaving debts or facing serious illness. Medical expenses can drain savings. Good insurance can truly save lives.

Key Principles of Effective Financial Planning

1. Manage your budget mindfully

Creating and tracking a budget is fundamental. It helps you understand where your money goes and control your spending better.

2. Savings + Investment = Wealth

Saving alone is not enough. Money must work for you through investments in bonds, stocks, real estate, or mutual funds.

3. Manage risks with insurance

Life and health insurance are essential. They are not expenses but protective measures for your investments.

4. Plan tax-efficiently

Using tax-advantaged savings accounts, such as a personal retirement account (IRA) or national funds, can help grow your savings.

5. Prepare for retirement wisely

Planning early ensures a comfortable retirement. Start during your working years.

9 Steps for Sustainable Financial Planning

Step 1: Set clear financial goals

Many people don’t know what they are saving for, leading to aimless saving. Set specific goals, such as:

• Buying a house
• Buying a car
• Retirement fund
• Children’s education
• Medical expenses
• Academic scholarships
• Tax planning

Clear goals help us choose the right financial products aligned with our objectives.

Step 2: Record income and expenses regularly

Up to 90% of new workers feel “there’s no money left to save this month.” Practice daily income-expense recording to understand:

• Where your money goes
• What are necessary expenses
• What are luxury expenses

This leads to real savings. Nowadays, apps make bookkeeping easy and convenient. Always ask yourself before spending.

Step 3: Create your personal financial statement

People get annual health checkups but rarely check their “financial health.” Record:

• Total assets: bank accounts, investments, property value, cars, collectibles
• Total liabilities: mortgage, car loans, credit cards, informal debts

Calculate: Assets - Liabilities = Net worth

This formula shows how wealthy you truly are after years of work.

Step 4: Have an emergency fund of 3-6 times your expenses

If you get laid off on Friday or a family member suddenly needs large medical expenses on Monday, you need a “safety net.”

Emergency funds should be at least 3-6 times your monthly essential expenses. For example, if monthly expenses are 20,000 baht, save 60,000 - 120,000 baht.

This fund should:

• Be safe and highly liquid
• Be withdrawable in cash
• Have low risk (such as bank deposit accounts or money market funds)

Step 5: Know your risk profile and buy appropriate insurance

Many insure their homes and cars but forget about insuring themselves. If the family breadwinner falls ill or passes away:

• Income stops
• Medical costs soar
• Family faces financial crisis

Life + health insurance = smart protection

Step 6: Save first before spending (Avoid over-indebtedness)

Change the formula from: Income - Expenses = Savings

To: Income - Savings = Expenses

Good guidelines:

• Save at least 10% of income
• Debt repayment should not exceed 45% of income

Example: With a 20,000 baht income, debt payments should not exceed 9,000 baht. Exceeding this makes life difficult.

Step 7: Diversify income sources

COVID-19 showed that relying on a single income is risky. Many lost jobs.

Having multiple income streams is no longer optional but necessary. Use free time to find side income, which can:

• Increase savings
• Prevent dependence if unemployed
• Support yourself independently

Step 8: Let money work through systematic investing

After saving, invest according to your risk level:

For guaranteed returns: bonds, savings accounts, real estate For higher returns with risk: stocks, mutual funds, other assets

Long-term good investments yield dividends, capital gains, or rental income.

Step 9: Invest in your financial knowledge

People with financial literacy make better investment decisions. Spend at least 1-3 hours per week studying:

• Financial YouTube channels
• Investment podcasts
• Free webinars from agencies
• Financial books

The more you learn, the smarter your investments.

Summary: Start Today

“Knowing what to do is better than just knowing what is.” Follow these steps:

1. ✓ Create a financial statement
2. ✓ Build an emergency fund
3. ✓ Avoid over-indebtedness
4. ✓ Save and invest regularly
5. ✓ Continuously educate yourself on finance

Good financial planning is not about working harder but about laying a solid foundation for life. With a clear plan, any crisis can be overcome. The earlier you start, the more time and energy you have to grow your savings. Let’s fight for it! ✊