Have you ever earned a substantial amount but still felt financially insecure? This article draws lessons from the book “Achieve a Million” and outlines a personal financial plan focused on building long-term financial stability.
Planning for an uncertain future
Financial planning is an important part of preparing for the future. Ask what would happen if your income stopped tomorrow. A plan can help you make deliberate decisions about your finances.
Why financial planning matters
The article compares bank deposit rates of 9–15% in the past with rates of 1–2% in the present, arguing that saving alone may no longer be enough. Interest rates vary across periods and products, so these figures are broad examples rather than current quotes.
Low interest rates, inflation, and rising costs
The article argues that low interest rates and inflation can make it harder for savings to keep pace with expenses. It also points to longer life expectancy and unexpected medical costs as reasons to plan for a longer financial horizon.
A “life portfolio”: the whole financial picture
Instead of looking only at an investment portfolio, consider income, expenses, debt, savings, and investments together. The article compares this with acting as the CEO of a company called your life.
What a life portfolio means
A life portfolio considers your full financial picture rather than focusing only on shares.
Look at the whole picture
Reviewing where money comes from and where it goes can help you decide how to organize your finances.
Two people, the same amount of money
The article gives an example of two people who each have THB 5 million but obtained their money in different ways. Their financial situations and choices may therefore differ.
Three foundations for financial stability
- Manage debt: understand what you owe and make a repayment plan.
- Grow your money: consider investments in line with your goals, time horizon, and risk tolerance.
- Protect what you build: prepare emergency savings and consider insurance as part of a broader plan.
Managing debt
Debt management is an important part of building financial stability.
A three-step debt plan
- List all of your debts.
- Look for additional funds, such as a bonus or side income, that could go toward repayment.
- Prioritize debt with the highest interest rate.
Reviewing debt and refinancing
List each balance and its terms to understand the full picture. The source article also suggests that refinancing a home loan can save money; actual savings depend on loan terms, fees, and available offers.
Growing your money
After reviewing debt, the article turns to investing.
Goals and time horizon
Start by setting a goal and deciding when you may need the money.
Return and risk
Consider the risks associated with a potential return. Higher potential returns can involve higher risk, and investment values can fall.
Mutual funds
The article presents mutual funds as an option for people who do not have time to follow investments closely. The right choice depends on the fund, its costs, your goals, and your ability to accept risk.
Protecting what you build
Financial planning also includes preparing for unexpected expenses and considering how to manage risks.
Emergency savings
Set aside emergency savings that fit your expenses and circumstances.
Insurance as a financial safety net
The article describes insurance as one way to manage certain financial risks. Coverage and exclusions depend on policy terms.
Insurance and inheritance planning
Insurance can also be considered in inheritance planning. Suitability depends on a person’s needs and the contract.