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Having a contingency plan will help us become more financially prepared. The first thing to start with is having an emergency reserve fund at least six times the monthly cost, but those who are freelancers or own personal businesses should have at least 12 times more. For example, if we have monthly expenses of 20,000 baht per month, we should prepare an emergency reserve fund of 120,000 – 240,000 baht. It should be kept in the form of deposits or funds with low risk, but high liquidity.
It is well known that the deposit interest rate is opposed to the inflation rate which tends to grow higher continuously. Only money deposits may not be enough and cut off the opportunity for our money to grow. Therefore, choosing what to build and make our money grow is an ‘investment’. We should always invest in assets that are appropriate for our acceptable level of risk, duration, and goals. We should always study and understand before investing in that asset.
The more you let time go by, the more time is wasted on saving, so we should start saving early. Most importantly, all savings should have a clear goal. We should plan for these three phases.
3.1 Short-term goals (not more than 3 years) such as emergency reserves fund, and overseas travel. It is recommended to invest in low to medium-risk assets with liquidity, such as savings accounts or money market funds.
3.2 Mid-term goals (3-7 years) such as saving for a car’s down payment, and marriage. It is recommended to invest in medium-risk portfolios such as fixed-income funds or hybrid funds.
3.3 Long-term goals (7 years upward) such as retirement savings. It is recommended to invest in medium- to high-risk portfolios such as RMFs, dividends, stocks mutual funds, real estate, or gold.
It’s not bad to be in a liability if you know how to be in a liability that can create assets for you in the future. According to the basic financial planning principle, we should not be in debt and should have a debt of up to 40% of our salary. For example, if you have a monthly salary of 18,000 baht, you should not have a debt of more than Baht 7,200 per month.
Debt is inevitable in your 30s, so if you want to borrow before turning 30, you should ask yourself carefully whether you can repay your debt or not. If possible, they should not incur debts, especially those for consumption, because they will have high interest burdens that may cause long-term financial problems.
In your 20s, this is a time of learning about life, an age of self-discovery about what you want to do in the future. It is the time that we should learn to develop our skills and abilities so that life can reach the goals faster. Most importantly, make sure you build happiness for yourself. We can spend money to buy a little happiness, but we should not overspend till we are in debt.
Those with an income of 120,000 baht or more have to file a tax return which is a duty for people with annual income. As a result, tax planning will help us determine the exact, complete, and timely taxation guidelines. The sooner we plan the tax, the more money is saved.
Tax-saving planning can be done in a variety of ways, including donations, investments in SSF-RMF funds, insurance purchases, etc.
Knowing how to manage and save money at an early age will allow us to plan, and we can allocate money to live a stable life. What should not be overlooked is to have emergency reserve funds, start investing as soon as possible, savings for goals, debt management, better self-development, and tax planning. That’s it and our financial situation will be smooth and our dreams can be done faster than anyone else.
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