Why should you start planning your finances? Now is not the time to delay.

When facing an economic crisis and uncertain situations, many people realize that “financial planning” is not a luxury but a necessity for survival. If you still do not have a clear financial plan, this article will help you understand which steps to start with.

What is financial planning and why is it important in life

Financial planning is the process of managing our money to achieve financial stability, whether in the present or future. This process includes analyzing income, expenses, assets, liabilities, and setting prudent financial goals.

Think of life as a journey. If we want to go home, we need to know where we are now, what the destination is, and which route to take. Life is the same. Without a plan, we drift along until we encounter a crisis and only then become aware.

Why saving and financial planning are national priorities today

The Thai population is aging, but retirement risks are increasing

Recent statistics show that out of 100 retirees, only 25 have enough money for post-retirement life. The proportion of Thais over 60 years old has increased to 10% of the total population, and in 15 years, it will rise to 20%.

If you plan to retire at age 60 and live another 20-30 years (based on average life expectancy: men 71.3 years, women 78.2 years), and spend 30,000 baht per month, a simple calculation indicates you need to save at least 7.2 million baht just to have income during retirement.

However, nowadays, state welfare such as the elderly allowance of 600 baht per month and social security contributions averaging 3,000 baht per month are insufficient for a quality life. Coupled with future labor shortages, the ratio of working-age people to seniors will decrease from 6 to 1 currently to 3 to 1 in 2021, meaning that tax support for welfare will be less sufficient.

Inflation is a silent enemy that erodes your money’s value

Think back 20-30 years ago, a bowl of noodles cost 5-10 baht. Today, prices have risen to 40-50 baht. Rice has doubled in price. In another 30 years, the cost of goods we buy may double again.

To make your money beat inflation, investing becomes unavoidable because depositing money in banks with only 1-2% annual returns is not enough to prevent the loss of money’s value.

Family structures are changing; relying solely on children is no longer feasible

In the past, when families had many children, the elderly could rely on their children’s income. But now, the trend among Thai youth is to have fewer children due to higher expenses, averaging only 1-2 persons per family.

Statistics show that 55.8% of seniors still depend on others, but their children also have many expenses and may not be able to fully support them. Self-reliance through good financial planning is the most prudent choice.

Financial products are diverse but more complex

In the old days, depositing money in banks offered attractive returns. Today, interest rates are at historic lows, while investment options have increased, such as over 726 stocks(, more than 1,537 mutual funds), bonds, life insurance, and real estate.

Choosing suitable products aligned with your risk tolerance and financial goals requires understanding; otherwise, you risk making wrong decisions.

Basic steps of financial planning that beginners should know

( 1. Set your own financial goals

Without goals, saving becomes aimless. You should set clear objectives, such as:

• Short-term )1-3 years###: buy appliances, travel, pay for a wedding
• Medium-term (3-10 years): buy a house, buy a car
• Long-term (10+ years): retirement, children’s education

Don’t forget to allocate funds for insurance, taxes, and retirement. Sometimes, choosing the right products can give you tax deductions.

( 2. Track income and expenses regularly

90% of new workers face the problem of “month to month, no savings.” Keeping daily records of income and expenses helps you see where your money goes, what expenses are necessary, and what are unnecessary.

Just 7 days of consistent recording can reveal your spending patterns and allow adjustments. Many apps now make tracking income and expenses easy and convenient.

) 3. Create a personal financial statement

For those who have worked for years, it may be the first time to check:

• What assets do you have?
• How much debt do you owe?
• Is your liquidity sufficient?
• What is your true wealth?

A simple calculation: Total assets - total liabilities = net worth. The higher this number, the better.

4. Prepare an emergency fund

The world is unpredictable. You might have a job on Friday but lose it on Monday, or face emergencies like a family member’s illness requiring large expenses.

Prepare 3-6 times your monthly expenses in cash or easily accessible bank accounts, such as money market funds or regular savings accounts.

5. Understand your personal risk and get coverage

Many focus on insuring assets like homes and cars but forget that you are the most valuable asset.

If the family breadwinner falls ill or has an accident, not only does income disappear, but medical expenses can be huge. The COVID-19 crisis has shown that many families lost their breadwinner and were burdened with debt.

Having life and health insurance is a way to protect hard-earned money.

6. Practice the principle “Save first, spend later” — not wait until the end of the month

Instead of thinking: Income - Expenses = Savings, think: Income - Savings = Expenses.

When your salary arrives, immediately set aside at least 10% into another account or cash. Use the remaining for daily expenses. This discipline helps ensure consistent savings.

Many start their careers aiming to quickly build assets like condos, houses, or cars, often borrowing without proper planning. The good rule is: Debt payments should not exceed 45% of your monthly income. For example, with a 20,000 baht income, do not pay more than 9,000 baht in installments; otherwise, life becomes strained.

7. Find additional income sources

During COVID-19, many lost jobs from a single company. Having multiple income streams reduces dependence. Use free time or your skills to earn extra income.

Having multiple income channels is not optional but necessary nowadays.

8. Make money work through appropriate investments

Money left from spending and saving should not sit idle. Invest in suitable assets based on your risk tolerance and understanding.

Examples:

• Stocks or mutual funds: earn dividends and capital gains but carry risks
• Bonds: provide interest and principal repayment with more certainty
• Real estate: rental income and stability

Balancing your investment portfolio between risk and return is crucial.

9. Invest in your own knowledge

Today, many resources are available for learning about financial planning—websites, pages, YouTube, and podcasts—offering free content.

Spend at least 1-3 hours weekly studying to make your financial planning more effective.

Comparing two life scenarios: a saver vs. a non-saver

Difference of over 1.3 million baht! Today’s effort becomes future wealth.

Summary: Start your financial planning now, it’s never too late

Financial planning is not complicated; it’s about developing good habits gradually. The initial steps are:

1. Record income and expenses to know where your money goes
2. Create a personal financial statement to understand liquidity and true wealth
3. Set clear financial goals
4. Prepare an emergency fund
5. Save before spending
6. Invest in suitable assets
7. Continue learning

Financial planning is not just to get rich and relax, but to have happiness and security throughout life. Follow these steps, and you will see positive changes in your bank account for sure.