Why should you start thinking about money management now? Easy ways to avoid a financial crisis

Inflation is Eroding Our Money

Looking back 20-30 years, we used to eat a bowl of noodles for 5-10 baht. Now, it’s 40-50 baht per bowl. And in 30 years? It could be 100 baht per bowl. The cost of living keeps rising, but our salaries or savings do not increase proportionally. That is the enemy of saving and investing — inflation.

If we leave our money sitting idle in an account earning 1-2% interest per year, while inflation is at 3-4% annually, our money is actually being eroded by at least 1-2% per year. This is one reason why we need to make our money work for us.

Longer Life, But Savings Cover Only 25% of Retirement Needs

Statistics show that out of 100 retirees, only 25 have sufficient savings. Most rely on government welfare or their children.

If we retire at age 60, with an average lifespan of Thai men at 71.3 years and Thai women at 78.2 years, (some may live up to 100 years). That means we need savings to support a life lasting 15-40 years after retirement.

Simple calculation: if we need 30,000 baht per month after retirement from age 60 to 80:

• 30,000 baht × 12 months × 20 years = 7,200,000 baht

And this does not include inflation, emergency medical expenses, or a longer life. Are you prepared?

Changing Population Numbers: Fewer Children = Less Reliance on Them

Our parents’ generation expected children to care for them in old age. That’s no longer the case:

• Thailand’s aging population exceeds 10% aged 60+
• The new generation has fewer children (average 1-2 per family) due to high costs
• 55.8% of elderly still depend on others because they have no income sources of their own

Conclusion: If our children are only responsible for expenses and have no savings, where can we rely on? We must depend on ourselves.

The Shift in Workforce vs Retirees Ratio

In 15 years, retirees will make up 1 in 5 Thais, but the working-age population per retiree will drop from 6:1 to 3:1.

What does this mean? Government welfare will be insufficient. The monthly pension of 600 baht and social security fund averaging 3,000 baht — is that enough? Certainly not for a decent quality of life.

Financial Products Are More Complex, But That’s an Opportunity

In the past, depositing money in a bank earned high interest. Now, the lowest interest rates are at an all-time low (1-2%).

But because of this, there are many investment options:

• Stocks (726+ stocks)
• Mutual funds (1,537+ funds)
• Life insurance, health insurance
• Bonds, real estate
• Dividends and digital products

If we understand and choose appropriately, we can generate better returns than in our parents’ era.

Serious Illness, Unemployment, Crisis: Are We Ready?

During COVID-19, many families:

• Lost the breadwinner, leaving debt behind
• Suddenly unemployed, income vanished but expenses remain
• Suffered serious illness requiring treatment, draining all savings

Without insurance plans, backup plans, or emergency funds, life can fall apart easily.

Saving vs Not Saving: The Real Difference

Real example over 15 years:

Saver:

• Current savings: 10,000 baht
• Monthly saving: 5,000 baht
• Return: 5% per year
• Total after 15 years: 1,357,582 baht

Non-saver:

• Current savings: 10,000 baht
• Monthly saving: 0 baht
• Return: 1% (bank deposit)
• Total after 15 years: 11,607 baht

Difference: 1,345,975 baht

Just by diligence, signals, and choosing suitable investments, the results can differ by 100 times.

Financial Planning Starts Here

1. Set real life goals

“Why save money?” A simple question, but 90% of people don’t answer it. Without goals, saving money becomes aimless.

Goals to set:

• Buy a house, car
• Get married, travel
• Retire (most people forget this)
• Insure yourself and family (this is often overlooked)
• Tax deductions (monthly insurance and funds help)

When goals are clear, choosing financial products, saving rates, timeframes, and expected returns all make sense.

2. Record income and expenses daily

90% of working people say: “This month, I’ve been aware from day one.”

Try doing it for 7 days: Record every expense, even small ones. This way:

• Understand spending habits: essential rice? Nong Son? Clothes?
• See unnecessary expenses
• Think before each purchase

Today, there are financial apps that are easy and convenient. Think before spending 5 times a month, and you’ll understand that spending 500 baht takes 2-3 hours of work per month.

3. Make your own financial statement

After working for many years, do you know if you are wealthy?

How to calculate:

• Sum all assets: bank accounts, house, car, investments, valuables
• Sum all liabilities: mortgage, car loans, credit cards, personal debt
• Assets - Liabilities = True wealth (the higher, the better)

Many have worked for years: “No assets, full liabilities” — it’s time for a change.

4. Prepare an emergency fund of 3-6 times essential expenses

If unlucky on Monday and you lose your job, or face large expenses (family illness, home repairs).

Have 3-6 months of essential expenses in:

• Safe assets
• Cashable immediately
• With a return of 1-2%

Method: Savings account or money market funds.

5. Know your risk profile and protect it

Many protect their assets (home, car insurance) but forget to protect themselves.

If something happens:

• Loss of income (unemployment, illness)
• Family loses the breadwinner
• Heavy medical expenses

Must have:

• Life insurance (if something happens, family gets compensation)
• Health insurance (high medical costs)
• Emergency situation insurance

6. “Save first, spend later” not “Spend first, save later”

Change the equation:

• Old: Income - Expenses = Savings (often zero)
• New: Income - Savings = Expenses (forced to save)

Good rule: Save at least 10% of income. The first month of salary, saving more is even better.

Debt conditions:

• Total debt should not exceed 45% of income
• Example: Income 20,000 baht → debt not exceeding 9,000 baht

7. Find additional income sources

During COVID-19, many lost jobs. If we rely on only one income stream, the risk is very high.

Save 15% of your time to generate a second income:

• Freelance work based on your expertise
• Selling products, providing online services
• Learning new skills for freelance work

People with fewer layoffs are those with multiple income streams.

8. Let your money work, invest with understanding

Invest savings in suitable assets, chosen based on understanding and risk appetite:

High risk / high return:

• Stocks, stock funds (dividends + capital gains)

Moderate:

• Dividend stocks, bonds, balanced funds
• Real estate (rents at a steady rate)

Low risk / low return:

• Savings accounts, money market funds (low risk, guaranteed returns)

9. Invest in “Knowledge” first

Knowledge is the most valuable asset. Free resources include podcasts, YouTube, SET Education websites.

Spend 1-3 hours weekly studying:

• How to read financial statements
• Understanding risks of different products
• Following economic news
• Listening to analyst perspectives

Knowledge is wealth. Those who “know” invest wisely, reducing mistakes.

The only step is “Start”

What you know is not as important as actually starting today.

Recommended steps:

1. Make a financial statement — know yourself first
2. Build an emergency fund — create a buffer for safety
3. Stop over-indebtedness — keep debt payments under 45% of income
4. Save and start investing — in products you understand
5. Continue learning and adjusting plans — all the time

Follow these steps. Whether the economy is in crisis, normal, or booming, you will have a financial plan that can withstand anything.