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Published on March 25, 2008

Good financial planning will certainly help. It's not as difficult as it sounds. We only need a little bit of self-awareness, realism and discipline.

Self-awareness entails knowing our financial position: how much we earn, where we spend and how much we can save.

Estimating our earnings is obvious. On the other hand, keeping track of our expenses is quite cumbersome. Few people jot down figures each time they spend. But, don't worry (now); we have no need to be that exact.

We can simply estimate expenses by category; for example, food, shopping, fuel and transportation, housekeeping, entertainment, healthcare, tuition for the children, rent, utility bills, interest and charges, debt repayment and insurance premiums.

Before moving on, we can look back to see whether we missed something by checking how much we have left in our pocket each month.

What if we don't have any money left - or even worse, what if we're in the red?

Now we have to worry. It's inevitable that tomorrow is coming, and we'll need to have sufficient means to get by, not to mention we may need more to live a better life. It is also advisable to save for a rainy day that may interrupt the course of our life.

So, we have two choices: make more or spend less. Everyone knows which one is easier. By understanding where our money goes each month, we can reduce unnecessary spending today for necessary spending ahead.

Saving more is good, but don't we think that saving enough is better?

Typically, experts suggest that depending on our life stage and lifestyle, we should be able to save 10-30 per cent of what we earn. However, that does not guarantee we'll have enough. Enough or not is determined by our financial objectives.

For example, we may want to retire early. Let's say we would like to retire in 10 years at the age of 55 and live for another 15 years. This means we'll have to work 10 years for outlays over 25 years. In a world without inflation, should we plan to spend Bt30,000 a month during our retirement, we'll need a total of Bt54 million.

Putting the money in the right investment option certainly helps reduce the saving burden - let our money work for us while we also work for it.

Looking at this Bt54-million figure, no one except yourself knows whether it's achievable. Be realistic about your objectives and saving capacity.

Should we arrive at realistic - and specific - goals, we then need discipline to execute our life plan and harvest the fruit we grow. Spending is a lot easier - and more fun - than saving. So, after all this awareness and being realistic stuff, we need perseverance to start

SAVING NOW and NEVER STOPPING!

Have a SAVE trip. Bon voyage!

Wirawat Panthawangkun is a first senior vice president at Kasikornbank.

The Nation