Mission to Production Column (Financial planning)

Mission to Production Column: How to do a financial plan during the Covid-19?

คุณ โจ มณฑานี ตันติสุข / Financial Guru: Covid-19 pandemic situation

Mission to Production (Financial Planning)

There is still a pandemic of Corona Virus-2019 or the Covid-19 continuously in every corner of the world. In Thailand, the pandemic started in January 2020, despite affecting our health, the Covid-19 also affected daily life and economic circumstance, significantly.

The company and many incorporations needed to close their business down. People became unemployed and struggled, hence, we should be concerned about financial planning in order to prepare for the unexpected situation that could occur anytime. Today, “คุณโจ มณฑานี ตันติ Financial Guru”, will inform you how to do financial planning during the Covid-19.

The thing that shouldn’t be reckless about is finance.

Many people see that the Covid-19 is the invasive virus, but personally, I see it differently because the Covid-19 is like the wake-up call that warns us that are we imprudent with how we are living our lives or not? Do we have reserve money or not? Because I’ve always said that we must have “Reserve Fund”.

“Reserve Fund” is the savings that you should have in an equal amount of your spending per month, for example, if you have monthly spending (this means the main spending you have) of 10,000 THB, you need to save 10,000 THB per month at least 6 months, which is a universal principle. Nonetheless, some people may save up to 8 months or more, which is acceptable. I, personally, would save up to 12 months because more is better than less, and it is the safest way to save money.

Why Should We Must Have Reserve Fund?  

When the unexpected situation occurred, the obvious example in the present is the vast unemployment which is the result of the Covid-19 pandemic, if we do not have reserved money for monthly spending, just imagine it, how our lives would turn upside down or how stressful could we be? But if we have the reserved money which is the money that we save every month for monthly spending, I would like to emphasize here that it is a “necessary spending per month”, if you have saved for 12 months, when there was an emergency, such as you were unexpectedly unemployed, you still had enough money for 12 months spending which indicated that you have financial security. Otherwise, if you did not have this part of saving, you could not say that your life is secure because you did not have financial security.

What type of saving is not suitable for handling the emergency?

Endowment insurance is not suitable for this type of saving, because it is the long period saving of more than 10 years. It is good for the seller but not us, and the insurance will be equal to the saving, hence, if anyone has heard about high interest rates saving, you should be highly aware that it is an insurance.

For those who work as a day laborer or a freelance, you should seriously do a financial planning. Freelancers should not have an accuse that you need monthly income to be able to save money, because this is all about the spending habit. As for the day laborer’s saving, if you receive 300 THB per day, 20% deduction for a saving should be made. As for anyone who always complains about having to save while you get a small amount of income, saving habit should be practiced, if you get trivial income, you save it trivially. Practicing habit is like practicing your subconscious so that you will automatically use less money, and the love of saving will follow afterwards.

Source of Income is Important

We should have many sources of income when we are doing financial planning. Despite having a reserved money, we should have various paths of earning, do not depend on the sole stream of income. For those who do not have a capital, we should think whether we can initiate something without having money as the capital, for example, manpower, connection or others that we should consider about by not having to loan.

“Poverty makes people creative. When we face difficulty and inconveniences, it will equip us with creativity in which we do not have to invest money on it that much, hence, do not despise poverty and difficulty because it makes you efficient.”

Get to Know Provident Fund

Salary persons’ attitude is to complain first that they do not have enough money. They must adjust their attitude to this that you should always spend less than what you earn, you should not spend all of the income you have had but live and eat below it. If you practice this habit, you will eventually be able to do it naturally. If your workplace has provided provident fund, you should enroll for it as well, because Provident Fund Act is protected by the enactment in which the lender cannot take this part of your money. Suppose that you are in debt for 300,000 THB, the lender cannot seize the money in provident fund to clear the debt, therefore, provident fund will protect us from the lender, and we will get 100% compensation.

Covid-19 teaches us to be determined and patient, provident fund teaches us to be patient as well to be the spending source when you are unemployed, have no money and get sick similarly to having a retirement when you get old but not burdensome.

In summary, to handle any situation, the latest one is the Covid-19, the most important thing is to save money and have reserve funds as well as have many streams of income to help us through the crisis safely. Another crucial thing is to be mindful when you spend money, we need to make finance fun in terms of planning and bounding ourselves to it. How we treat money is the reflection of how we treat ourselves. If we excessively spend it, it reflects that we do not love ourselves, because money directly ties to our own perceptive of values.