Why do Thais save money? Check your financial readiness

Have you ever wondered how necessary a financial plan really is? Many people think that just saving money is enough, but in reality, systematic financial management is what can truly change your life for the better. This project involves planning your personal finances to achieve financial security in the future, considering your assets, income, expenses, and financial goals you want to accomplish.

Why is financial planning necessary?

Think about the risks that occurred during COVID-19. Some people suddenly lost their jobs, others had to stay at home. However, those with a good financial plan and sufficient emergency reserves were less vulnerable. Conversely, those unprepared—illness or job loss—could quickly face a financial crisis.

Major warning signs

1. The aging society is here The general fact is that Thailand’s population is entering an aging phase. The number of people over 60 is increasing, life expectancy is rising—men 71.3 years, women 78.2 years. The concerning part is the ratio of working-age people to elderly: decreasing from 6:1 to just 3:1.

Simply put, if you retire at 60 and spend 30,000 baht per month until age 80, you need to prepare 7.2 million baht. Not counting inflation or additional medical expenses if seriously ill.

2. Fewer children, relying less on others Statistics show that 55.8% of seniors still depend on others, but it’s difficult for our children too. Children often cannot save money monthly, so we must rely on ourselves.

3. Inflation, the real enemy Noodles cost 5-10 baht twenty years ago; today, 40-50 baht. In 30 years, it might be over 100 baht. Therefore, winning investments against inflation are essential.

4. Government welfare is insufficient Old-age pension is only 600 baht/month; social security fund averages 3,000 baht/month. Is that enough?

5. Many investment options but more complex 726 stocks, 1,537 mutual funds, plus insurance and other financial products. You need knowledge to choose correctly.

6. The benefit of saving early The saver vs. the non-saver: saving 5,000 baht/month for 15 years at 5% annual return results in 1,357,582 baht. The non-saver has only 11,607 baht. Huge difference!

7. Life risks must be protected Serious illness, job loss, accidents—these can happen anytime. Having insurance and emergency funds is the best safeguard.

What is the core of a financial plan?

1. Manage your budget wisely

Understand where your money flows in and out to improve and cut unnecessary expenses.

2. Save and invest together

Saving is accumulating; investing is making your money work. Both must go hand in hand.

3. Insure yourself thoughtfully

Life and health insurance are not luxury expenses—they are payments for your future.

4. Tax planning smartly

Invest through channels that offer tax deductions, which effectively increases your savings.

5. Plan for retirement—it’s not a dream

Calculate seriously how much money you will need after retirement.

Make it happen: 9 practical steps

Step 1: Set goals

House, car, education, marriage, travel abroad, comfortable retirement, etc. Be clear about what you are saving for.

Step 2: Keep records

At least weekly, record daily income and expenses to see your spending habits and identify unnecessary costs.

Step 3: Create a financial statement

Record everything you own: bank balances, investments, house and car values, valuable items. Check against all liabilities. Calculate: Assets - Liabilities = Net Worth.

Step 4: Prepare 3-6 times your essential expenses

If your monthly essential expenses are 10,000 baht, save an emergency fund of 30,000-60,000 baht. Keep it in a liquid account with returns, like a money market fund or regular deposit.

Step 5: Know your risks and protect yourself

Life and health insurance are not expenses—they are protection for your family during your absence.

Step 6: Save before spending

Change the formula from Income - Expenses = Savings to Income - Savings = Expenses. Save at least 10% of your income immediately when you get paid, not at the end of the month.

Step 7: Control your debt

Your debt payments should not exceed 45% of your income. If your income is 20,000 baht, your debt should not be more than 9,000 baht; otherwise, life will be tough.

Step 8: Have additional income sources

Rainy days happen. In the COVID era, one income is not enough. Use your skills and strengths to find extra income.

Step 9: Make your money work

Invest surplus funds according to your understanding and risk appetite—stocks, mutual funds, bonds, or real estate—based on each situation.

Never stop learning

Nowadays, there are many free financial knowledge resources—YouTube, Podcasts, SET Education websites, and more. Whatever you want to learn, you can access immediately. Dedicate 1-3 hours/week to enhance your knowledge. This will make investing and financial planning more enjoyable and effective.

Summary: Start now

There’s no “more” about how many years you know—if you don’t start, it’s all meaningless. The important thing is to begin. Follow these 9 steps: create a financial statement, build emergency reserves, avoid over-indebtedness, save and invest, gradually build your portfolio, and keep learning. Financial security and readiness for any financial crisis will surely follow.