The spending habits of the new generation and smart solutions to address the problem

Why do financial institutions tell us to plan our spending?

Nowadays, life is more uncertain than last year. The economic crisis is recurring. The pandemic has damaged income, and all purchased goods are continuously becoming more expensive. Many people find themselves without savings, unaware of where their money goes, and when a crisis occurs, they have to borrow because they lack reserves.

Financial planning is not just for the wealthy but essential for everyone—from entry-level employees to executives—because it helps us achieve financial stability at different stages of life.

Why do many people say “their salary is gone after 5 days”?

The problems are multifaceted:

1. Longer life expectancy but insufficient retirement funds

Statistics show that out of 100 people, only 25 have enough money to live on after retirement. The average Thai lifespan is 71-78 years. If retiring at 60, one needs funds for another 15-20 years.

Simple example: If you need 30,000 THB/month after retirement until age 80, that’s (30,000 × 12 months × 20 years) = 7.2 million THB (not including inflation)

But what does the government provide? The elderly allowance is only 600 THB/month, and social security fund is just 3,000 THB/month. Not enough at all.

2. Changing family structures, fewer children

In our parents’ time, we relied on children. Now, people have only 1-2 children, and the children themselves are working hard, heavily in debt, with little to save. How much can they help their parents?

3. Inflation erodes the value of money

Twenty years ago, a bowl of rice with curry cost 20 THB; now, it’s 50 THB. Noodles used to be 5-10 THB per bowl; now, 40-50 THB.

If you wait another 30 years, the prices of today’s goods may be 2-3 times higher. The same amount of money will buy less. Those who don’t plan to invest will definitely lose to inflation.

4. State welfare is insufficient

Within 15 years, the proportion of people aged 60+ will increase to 20% (1 in 5 Thais). Meanwhile, the working-age to elderly ratio drops from 6:1 to 3:1. The taxes collected by the government are not enough to cover all welfare, so individuals must rely on themselves.

5. Financial products are more complex

In the past, depositing money in a bank earned attractive interest. Now, the lowest interest rate is only 1-2%. To get better returns, you need to learn about stocks, mutual funds, bonds, crypto, etc. There are over 1,500 products with varying risks. You must choose what suits you.

6. Increased uncertainty in life

COVID caused many to lose jobs. Some are still searching for work, others are recovering from illness. Goods bought may disappear. Without reserves, failure is imminent.

The answer: What kind of financial planning leads to success?

Principles of planning you need to know

1. Manage income and expenses clearly

Budgeting isn’t about hoarding money but controlling where it goes. Track expenses regularly. Start recording today for at least 7 days to see spending patterns and adjust accordingly.

2. Saving and investing are the foundation

Don’t save after spending; save first, then spend the rest. Start with 10% of income. Reduce expenses to fit this plan.

Invest the remaining money based on principles: people aged 25-35 can take higher risks (stocks, equity funds); those 35-45 reduce risk (mixed); over 45, plan for stability (bonds, real estate).

3. Manage risks from unforeseen events

Life insurance, health insurance, critical illness insurance are essential, not luxury. Serious illnesses cost a lot and cause income loss. With coverage, your family stays protected.

4. Master tax planning

Invest in retirement funds (RMF) for tax deductions. Invest in local stocks (LTF) for tax benefits. Not knowing this is a missed opportunity.

5. Plan for retirement early

The sooner you start, the more your money can grow (compound interest). Compare:

The difference is 1.3 million THB—not a small amount!

Practical steps you can start today

Step 1: Set clear life goals

Not just saving money but knowing what for:

• Buying a house/car: how many years to save?
• Traveling abroad: how much?
• Getting married: how much to prepare?
• Retirement: how much to save? (Most people forget this!)

Make a detailed list with estimated costs and target years.

Step 2: Record income and expenses for one month

Many don’t know where their money goes. Track daily:

• Salary/income
• Food, water, electricity, rent, others
• Luxuries (brand-name items, games, entertainment)

After 30 days, you’ll see clearly what’s necessary and what can be cut.

Step 3: Create your own “financial statement”

Try recording:

• Total assets: bank accounts, investments, house, car, gold, brand-name items
• Total liabilities: mortgage, car loan, credit card debt, informal loans, other debts

Assets - Liabilities = Net worth (true wealth)

Example: Assets 5 million THB, liabilities 3 million THB = true wealth 2 million THB.

Do this annually to see progress.

Step 4: Prepare an “emergency fund” (Emergency Fund)

If you suddenly lose your job, fall ill, or face a major event, cash runs out. Home or work becomes impossible. Crisis!

Set aside at least 3-6 times your monthly expenses.

• Example: essential expenses 20,000 THB/month, save 60,000-120,000 THB.

Keep it safe, highly liquid, withdrawable immediately—savings account or money market fund.

Step 5: Know your risk profile and protect yourself

Many save money but when accidents or illnesses happen, funds run out, debts increase, family faces crisis.

Must have:

• Life insurance: if we pass away, family gets compensation, pays debts, and has money to continue living.
• Health/mental health insurance: accidents, major illnesses, expensive treatments.

Important: Not optional but mandatory

Step 6: Use the “pay first” method, not “save what’s left”

Wrong formula: Income - Expenses = Savings (nothing left!)

Correct formula: Income - Savings = Expenses (reduce expenses!)

The first month may be tough, but after 1-2 months, it becomes a habit.

Important: Total debt should not exceed 45% of income.

Example: Income 20,000 THB, debt payments should not exceed 9,000 THB.

If it exceeds, life will be very difficult.

Step 7: Increase your income

COVID taught us: relying on a single income is too risky.

Use your skills or free time to earn extra. Side hustle is no longer a luxury; it’s a necessity.

Step 8: Make your money “work”

If you leave money idle without investing, inflation erodes its value. Money must work to generate returns.

Invest according to your understanding and risk appetite:

• Low: savings accounts, dividend stocks, bonds
• Moderate: fixed funds, real estate
• High: growth stocks, equity funds

Example comparison (20 years):

• Bank deposit 1.5% → 14.7 million THB
• 5% return investment → 23.2 million THB

Gain an extra 8.5 million THB just by choosing to invest wisely!

Step 9: Invest in your mind (knowledge)

Read financial articles, watch YouTube, listen to podcasts or webinars about financial planning.

Investing in your knowledge and mindset from the start can prevent many “stupid mistakes.”

Summary: Financial reminders for working age

If you save 5,000 THB/month with 5% annual return for 30 years:

• Year 10: 813,000 THB
• Year 20: 2,054,000 THB
• Year 30: 4,143,000 THB

Compared to someone who doesn’t save, the difference is huge.

It’s not just the wealthy who plan their finances, but those who plan well will keep getting wealthier.

Today is the first day of your financial planning. Start by recording your income and expenses for 7 days. Then follow the steps. In 5 years, you’ll thank yourself. Keep going!