Planning

What’s the first thing you should do after you get your monthly allowance?

Sit down and list your total fixed monthly expenses – electricity, water, rent and telephone bills, says Jotika Savanananda, managing director of TMB Asset Management Co Ltd.

“This will help you avoid running out of money before you pay those bills at the end of the month,” Jotika says.

Planning is a matter of self-control for Watcharawit Saengpongchawal, a fourth-year economics student at Thammasat University.

He gets Bt8,000 each month from his parents and older sister and needs about Bt2,000 from his allowance to pay his monthly bills. That leaves Bt6,000, or about Bt200 a day.

That isn’t much, but that doesn’t mean Watcharawit has to be stingy. He knows how much snacks and clothing cost and keeps within his limits.

He goes to movies and buys the food he wants. “Saving money is learning to pay the right price and keeping within your bounds. It doesn’t mean having to starve,” says Watcharawit, 21, who lives alone in a small apartment near his university.

“Don’t pressure yourself,” he suggests. “If you want to buy or eat something, do it.” Within reason.

However, if you want to buy a car or open your own business after graduation, you should start saving money now.

TMB Asset Management’s Jotika suggests saving as much as you can, up to 30 per cent of your allowance after you’ve set aside the portion you’ll need for monthly bills.

For instance, if your parents give you Bt10,000 a month and you spend Bt3,000 on monthly expenses, you’ll have Bt7,000 left to spend on food, transportation, clothing and entertainment. Putting Bt2,100 into your piggy bank would be a healthy amount.

How much you can afford to save depends on how much money you get from your parents. But when you get your allowance, be sure to sock enough cash away for bills and for savings.

“Don’t wait until the end of month,” Jotika suggests, “because you might not have anything left to save.”

If your monthly allowance is transferred directly into your bank account, leave it there and gradually withdraw funds as you need them, says Ajalavich Sirikham, deputy manager of the Tapradoo branch of Krung Thai Bank in Rayong.

“You’ll not only get interest from the money you leave in the bank, your savings will keep growing by doing this,” says Ajalavich. He adds that the monthly deposits and the growing balance of your savings account will be an advantage when you apply for loans after you graduate.

“Your savings book will prove that you’ve had experience managing money during your university life, even though it isn’t a lot of money,” Ajalavich says. “Your bank will consider your record when deciding whether or not to lend you money.”

Making your money grow

Students interested in increasing their savings might not be satisfied with the low passbook interest rates offered by banks. That rate currently is about 0.5 per cent annually.

Watcharawit, the Thammasat University student, bought special Government Savings Bank bonds to make his money grow faster. These are three-year deposits that allow investors to select numbers, which pay a high return if they are chosen. Each number costs Bt50.

Watcharawit started with 100 numbers and now has 3,000 lottery numbers.

He estimates they pay about Bt200 each month. “It grows slowly, but it grows,” Watcharawit says.

He also plays the stock market. Watcharawit says he learned about stocks by attending business fairs such as SET in the City and Money Expo.

At first, he enjoyed following stocks and watching their prices rise and fall. Then, he grew serious about it and began researching individual companies.

He invests via the Internet rather than through a broker because he feels confident about his research and choices and because he doesn’t want to pay brokerage fees.

Most novices rely on a broker, who charges a commission for trades, but has in-depth knowledge about the companies and the most promising sectors (such as energy, telecommunications or pharmaceuticals) on the stock market.

At this moment, Watcharawit has Bt40,000 invested in the stock market.

If you aren’t interested in the special Government Savings Bank bonds or the stock market, a money-market fund is another option.

Money-market funds are almost like putting your money in a bank, says Jotika, except their rate of return might be 1 or 2 per cent higher, depending on the fund.

Money-market funds are a type of mutual fund that invests in money-market instruments.

Money-market funds pay more than savings accounts because they invest in securities that have a higher return but also a higher risk of default, or failure to pay. Money-market funds, however, are a much easier and safer to invest in than the stock market, particularly for the inexperienced investor.

Suwicha Chanitnun,

Watchara Saengsrisin

The Nation