Savings

What is saving?
Savings refer to the portion of disposable income.

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 Normally, savings happen when a person has
income more than expenditure.

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 How to increase savings?

Make an attempt to increase income

(extra work, working efficiently, reducing expenditure)

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 In terms of economic system;
Besides safety,
Savings can help a country through investments

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Importance of
Saving
 1. Promote family
stability
a. An emergency fund

b. For nurturing the family

c. Assets for retirement, gets

laid off (fired from work too),
medical bills or death.

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 2. To generate more
family income
a. Saving in banks has
benefits = the interests

b. Using the saved money to

invest on money-making
businesses or things

c. Use the savings to start a

business
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 3. To raise the
standard of living

a. Savings can be used to

pay for the things we
want to have like phones
or cars. Buying these
things using your savings
helps to satisfy your
wants and needs
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 4. To develop
country’s economy
a. Savings can be used for
investments
Business-focused investment like
owning business, buying
businesses, starting one
AND
Infrastructure-focused
investment like construction of
needed buildings, roads, dams,
airports etc.
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 5. To reduce dependability
on foreign countries (and
their money)

a. There is a need to have a high

savings rate in Thailand so the
country will not borrow
money from other
countries/foreign banks

b. Insufficient savings (not Having a savings gap (not

enough savings) can be a
problem for the country’s growth
and development
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enough savings) means there’s
not enough money to use for
the country. The usual solution
is to borrow money from other
countries/international banks
 Homework: Do it in your notebook

Interview 2 people (1 Students, 1 Adult– teacher, parent, any adult)

Ask them 2 sets of questions about savings.

1. Do you save money? Who taught you how to save?

Why do you save money?

2. Should people save money? What one advice will you tell them
about saving money?
Factors of
Saving
 Savings comes from good
financial management and
clever spending.

Savings can help overcome

unexpected financial problems.

The amount of money to be

saved depends on many factors
like the following:

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 1. Disposable Personal Income

Disposable Personal income is the

total net income after personal tax is
paid

Typically, high-income groups have

more savings than low-income
groups
High-income groups = the bosses, the
administrators, business owners,
high-ranking officials etc.

Low-income groups = low-level officers,

Teacher life is already farmers, teachers, factory workers etc.
hard. Stop making my
life hard you kids! Page 5
 2. Interest or profit gained from
savings

Comes in different ways:

interests (reward from using banks),
profits (money from business), or
dividends (money from owning
stocks/shares/part of a business investment)

Ex. Bank B will offer high rate of return

(money paid to you) if you save high
amounts in Bank B.

Ex. If your company earns high (dividends),

you are encouraged to buy more SHARES of
that company, then the company will have
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 3. The Value of Money
The power of money (purchasing
power, its value– how many can you
buy basing on the value of the
money)
In 2015, 1 US Dollar
was equal to The power of money changes all the
36 Thai Baht time.
Ex. When you hear in the news that the Thai Baht
weakened, it means that its value is no longer the
same– things will become expensive.

The opposite is also true. Now if people think that

the power of money becomes high in the future,
people will be encouraged to save.
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 4. Personal Spending habit

Frugal people save more

(frugal means thrifty, careful with
spending).

Heavy spenders save less. Simple as

that.

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 “Panic Buying”
5. Expectation of future events

People who think there will be

increase in tax might spend their
money and savings to buy and store
important needs while products are
cheap

When people think that an economic

disaster in world will affect trade and
business in Thailand, people will start
saving for emergency (scared of
losing job or not getting any salary)
Will there be a problem if many people
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started saving money and stopped buying?
 6. Technological financial
services

Technology makes it easier for

people to spend = this can mean
people might not have savings
because it is easy to buy using credit
cards, debit cards and even using the
ATM

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 7. Welfare system after
retirement

Countries that support people through

welfare and pensions will have people
of low savings rate– the idea is “the
country will help them anyway so why
save?”

Countries with poor welfare system

and low pension will make people save
more for their old age retirement.
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 Disposable
income

Welfare Interest or
system profit gained

Factors
Technologica that affect
Savings Value of
l service
money

Expectation Personal
of future spending
events habits
Targets of
Saving
 Targets of Saving
Short-term savings:
Collecting money for emergency
use (medical expense,
education, residence etc.)

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Long-term savings:
collecting money little by
little for a long time for the
future (for retirement, stable
life)
 How to manage
Household Saving
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 Page 8
1. Set clear targets of savings

Savings

The target includes time, reason for saving,

The target:
amount of money needed to be saved.
Maybe you want to
buy something Ex. Saving 150K Baht in 2years to buy a good car
 2. Keeping track of monthly income
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and expenditure
 3. Making the most of monthly savings
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Planning how to get benefits out of your savings is something good to

do instead of just letting your money sit and kept the same in value
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However, you have to be very careful and smart. There are some
Remember this: There are a number of financial institutions and
people doing the same thing– collecting savings and offering the
business people that gather funds from savers in various ways
same services- but are doing it illegally.
offering you interests as rewards and back payment.
There have been many victims already of fake bankers, insurance
They then would use your savings to either start a business or
sellers, and businessmen OR SCAMMERS who ran away with the
will give the service they offered you first like insurance. This is a
money of the people who promised them EASY rewards, returns
legal thing to do
and gains.
 Rules of Saving
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People are now encouraged
to save
or invest their money

So, we must be extra careful

and check
the background of the
savings and
investment group we will be
using.
 What should you check on if
you want to use saving and
investing services? These four:

Rules of Saving

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Is the RETRURN we
Are our savings get satisfactory?
safe? How to calculate
it?

Can our savings be What are the

withdrawn when expenses of
needed? saving?

1. Safety of savings: saving and
investing your money means you
take risk of losing it.
You have to consider your
money’s safety before saving and
investing
6. Any extra service from savings:
Will you own part of the business when you invest on it?
How much interest will you pay if you use banks credit
card?
5. Tax:

Consider whether it is easy to pay tax

2. Liquidity ratio of savings:
on profits you get when saving or
Can you take back or withdraw
investing and how much tax to pay.
your money quickly?
Yes. There is tax for the profit you get
Liquidity in savings means how
from saving and investing.
quickly you can get your cash

4. Interest rates:
3. Convenience:
Consider the INTERESTS or RETURNS you can get
Consider whether it is easy to use the
when saving or investing.
service of banks/businesses simple or
hard
Do you want to get a low return?
 Where can we observe
these features?
Benefits of using Commercial Banks
1. Low risk:
Your money is safe and will never be lost
BUT interest is low
2. High liquidity:
meaning you can easily withdraw your
money
BUT some interest might be lost if money
is withdrawn
3. Convenient financial transactions
(deposit, withdraw etc.):
In our time, with technology, financial
transactions are easy.
Problems of
Savings
1. Most Thai people have low incomes
2. Most people lack knowledge of savings
and investment
3. Most financial institutions are
mounted up in one central area
4. The government implements low interest policy
during economic depression
Sorry but the country right Fine then. I won’t save
now is experiencing economic
problems. We will have to give my many if I get very
low interest in our bank little reward
 5. Thailand is facing the savings gap
You who thought The person who looks
You have saved dirty but have saved a
a lot in the bank lot in the bank

Some people try

to earn more
(solve the gap) by
doing extra
job/sidelines/
small business
etc.
Getting into the SAVING habit

•1. Spend money wisely

•2. Increase your income

•3. Think before spending

•4. Make short-term and long-term plans of saving

•5. Nurture good habit of saving
 Imagine you have saved 50,000 Baht

How will you use it?

Example of investing with
Investment is putting or
reward: Using your
using your money into
personal savings to buy
something because of
BITCOINS because you
the REWARD or profit
think bitcoins can make
you can get over a
more money for you in
period of time.
the future

But, in investing you also have to consider the RISK.

Ex. Right now, bitcoin prices are down meaning people who have
bought bitcoin are not making any money
 Check these 5 investment 1. Buy company share 2. Start a business 3. Re-train and education
ideas. So right now you are an
adult with 50K 15k Worth of
Consider the risk and the 5k Worth business
reward first. of share

Choose which to invest in (you

only have 50K). You can put all
you money on 1 investment if
you like. You can also buy all Reward: 3% of your total
types of investment. UP TO money will come as a profit
YOU every end of the month
Risk: It makes money but the
Explain why you chose these company is new and a copy of
investments and how it will McDonald’s-- this is a problem
help you in gaining profit.
4. Travel
Reward: You can now visit
your dream destination;
happiness
Risk: Spend your savings;
have to work again to save
10k Worth up; unseen problems can
of tickets come
Reward: You own all the
profit, you to work real hard.
Risk: First 3 years of a
business is the riskiest;
business can die quickly in
this time
10k Worth
of tickets
5k Worth of
training
Reward: New skills you can
use to do the job you REALLY
love.
Risk: Reward comes back after a
long time; Not sure if you can
make money from new work
5. Retirement Money
Reward: There’s money to
take care of you when you're
old
Risk: Economy can change for
the worse ruining your
retirement money