Thai opinion: It's time the young woke up and became financially literate

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STREETWISE
It's time the young woke up and became financially literate
Achara Deboonme

BANGKOK: -- Let me start with a brief conversation I overheard between two young men.

"My mum said she invested Bt50,000 in a fund. She has advised me to put extra money into the fund, but what is a fund?" one man asks his friend, who mumbles something inaudible.

"What is the fund doing with this money? Will there be a leak? I mean, will the money go somewhere else?" the puzzled man continues.

Obviously, if someone working in public or private financial institutes overheard this conversation, they would want to jump off the balcony.

Also, I guess those at the Stock Exchange of Thailand (SET) would be more shocked than others, given that the organisation has been very active in promoting financial literacy among youngsters. Apart from the True Visions' Money Channel and two shows on Channel 5, the exchange has a public library in its building, not to mention the SET Corner kiosks set up in universities, colleges and schools nationwide. These kiosks, of which there are more than 180 to date, provide all sorts of reading material, including those centring on personal finance, investment and savings.

The Bank of Thailand has also earmarked resources to promote financial literacy. For years, it has been running training programmes for teachers focused on financial planning, saving and investing. The www.1213.or.th website was launched last month to also spread financial knowledge among the general public. At a glance though, this website looks like it's devoted mainly to protect those who might be lured into building up debt or investing in some ambiguous instruments, or those who are cheated or unfairly treated.

Having been in existence for nearly two decades now, mutual fund firms and securities companies have also been working hard to promote their products.

However, with all this information made available to promote financial literacy, why did the young man mentioned above speak about mutual funds as if they are products from another planet? Why have so many fallen into debt traps? Why have many failed to build up their wealth so they can have a happy retirement?

Of course, financial literacy is not the only factor for a happy old age, but it might be able to provide strong immunity. New products are launched every month, but if consumers can learn that spending now means less saved tomorrow, then that desire to get a new mobile phone, TV set, car or other such items can be controlled.

It never stops surprising me when I hear my colleagues boast about their bigger TV screens. If our 32-inch screen still functions, why would we want to buy a more expensive, bigger one?

Also, the tendency for people falling into debt traps worsened with the last government. Apart from its rice-pledging scheme, the first-car buyer scheme was perhaps the most disastrous policies introduced by the ousted Yingluck Shinawatra government.

Thousands, lured by the offered tax rebate, rushed in to buy a new car. However, few realised that it came at a price - that they would still have to shoulder the interest cost of the loan they would have to take and that the instalments would eat into their disposable income. All sales representatives at auto companies admitted that many of their clients watched their "first car" being foreclosed in the first year due to "miscalculation". If this scheme was introduced in Germany, it is very doubtful that thousands of Germans would rush to buy a new Volkswagen.

A one-night stay at a house in Hamburg shed light on how humbly the Germans live. The house owner was past retirement age, but was still providing medical services. Though she was wealthy even by German standards, with her house located near a big park and a Mercedes Benz in the garage, there were no signs of luxury in her house. Yet, despite being alone in a large house, this lady showed she was emotionally and financially independent.

In comparison, poor financial literacy among Thais explains why Thailand's household debt is as high as 85 per cent of the gross domestic product. It also explains why many Thais will die poor.

A recent study conducted by a Bangkok University lecturer showed that only 34.6 per cent of old people in the Kingdom have any savings, with many having saved less than Bt100,000 - a sum that is meant to support them as well as provide for emergencies.

Apart from this startling figure, Thailand is fast becoming an ageing society, with some 9 million or over 10 per cent of the 65-million population crossing the 60-year mark.

Bear in mind, most old people cannot generate any income.

The National Savings Fund scheme that is scheduled to kick off in June is a good initiative. This is Thailand's first pension scheme that will help citizens working in the unregistered sector, such as farmers, freelancers or odd-job workers, save for their retirement. This scheme, tied in with the Social Security Fund and other social schemes, should definitely provide some hope. However, I still doubt that the overall situation will ever change. All financial institutes encourage people to save when they are still young. Unfortunately, this message has not reached many youngsters, including that young man who had no knowledge of a mutual fund.

Source: http://www.nationmultimedia.com/opinion/Its-time-the-young-woke-up-and-became-financially--30258369.html


-- The Nation 2015-04-21

[klauskunkel]

I guess those at the Stock Exchange of Thailand (SET) would be more shocked than others, given that the organisation has been very active in promoting financial literacy among youngsters. Apart from the True Visions' Money Channel and two shows on Channel 5, the exchange has a public library in its building, not to mention the SET Corner kiosks set up in universities, colleges and schools nationwide. These kiosks, of which there are more than 180 to date, provide all sorts of reading material, including those centring on personal finance, investment and savings.

Now, why is it 'shocking' that these promotions have failed? Watching the Money Channel rather than a TV drama? Reading at a SET kiosk rather than hanging out with friends and go street racing?

What you have failed at is making these activities 'cool', so the youngsters will be interested in them.

[Expat Brad]

Many young Thais particularly males simply put their hands out & their parents give the cash to them.......why save, they only need to ask. Until the day comes & it will that the old money dries up due to the parents self induced spiraling debt & they are going to be well & truly stuffed. These kids, the adult Thais of tomorrow have absolutely no knowledge or skills regarding the use of money other than spending it as quick as possible.

[Pimay1]

My girlfriend is financially literate. She knows what day of the month my social security is deposited.

[Konaboy1]

what do you expect from

[ChrisY1]

How can they be aware.......their education does not prepare them?

Sent from my iPhone using Thaivisa Connect Thailand

[trogers]

"In comparison, poor financial literacy among Thais explains why Thailand's household debt is as high as 85 per cent of the gross domestic product. It also explains why many Thais will die poor."

The Hi-So trap:

The brand name of one's wallet or purse is more important than the amount of money in it.

They learn to beg, steal or borrow to look financially successful from a young age.

Edited April 21, 2015 by trogers

[Nobb]

If young Thai has money they spend it. They not worry about tomarrow!

[NongKhaiKid]

Another imaginary conversation like the father and son version and all equally unbelievable.

[ezzra]

The only financial savvy Thais are good at is the underground lottery and the shares game that is

happening all the time like a clockwork, ask them anything about it and they know it all, anything

else is a waste of time as far as they concern....

[cracker1]

I note the young man referred to in the story did not refer to a "Mutual Fund" but more generally as a "Fund," and that would be of concern.

[Johnny S]

No Wonder when Thainews basically consist of gossip and clips from YouTube ...

[Commerce]

Of course, it is social status that is responsible for each and every to own a new Hilux but have sod all in the fridge. not even a single egg.

But of course, the face-saving social status is paramount, so much so that the Hilux must be driven to the local Sizzler because of no eggs in the fridge, and thus the meal is paid for on credit card, because......

We look cool and have great face!

Very unlikely to change until the housing market collapses, creditors can no longer loan against negative assets, and the government planned support is no longer sustainable... which will all happen, eventually, and not too far in the distant future. When that happens, watch the guys at the top blame the Western governments for the collapse of Thailand. Inevitable. And - I have no pity. It's called Karma - which Thainess does not literally recognise itself!

[trainman34014]

Headline should read.... ''It's time the young woke up ''. I have near neighbours that have three teenage and 20 something son's that lay in bed until 11am or after daily. Apparently they are 'studying' before deciding what they want to do for a job.

Most of the time i hear them talking about ''I want '' or ''I dream '' and little else. When they do finally get out of their pit, it's off down to get some roadside food or walking around playing pocket billiards for the largest part of the day. This appears to be the future of Thailand's ''upwardly mobile '' generations, so i don't see them starting to worry about the value of serious financial considerations !

[elgordo38]

I sadly during my working years listened to all that government garbage about saving for retirement. Well I am there now and what have I got? Almost zero percent interest on my savings (geeze I could have had a ball with this money over the years) 1.7% increase in my pension when the cost of living is over 5%. If I was a retired German I would have to pay the bank to "park" my money. Yes my money is in the bank and being lent out to people that did not save a nickle in all of their working years. These people are the new "saviours" of the world. They get money for almost nothing from the banks and then turn around and buy new cars, electronics homes with big mortgages with more square feet than they need. They are the new product junkies that turn over their electronics every 2 years. These are the consumers that will move the world forward. They are the consumer spenders that governments hope will lift us up out of all the problems that governments and the banksters have created. Sorry I have got to quite typing before I vomit again.

[Vagabond1]

Many young Thais particularly males simply put their hands out & their parents give the cash to them.......why save, they only need to ask. Until the day comes & it will that the old money dries up due to the parents self induced spiraling debt & they are going to be well & truly stuffed. These kids, the adult Thais of tomorrow have absolutely no knowledge or skills regarding the use of money other than spending it as quick as possible.

As a visitor talking to hotel staff, waiters, sales people - the usual when one comes for vacation - I found that the situation is reverse: many young people working in at least tourist industry come from rural areas and actually support their families/parents back there.

As to financial literacy - seems to be universal problem. Otherwise people in the west would not have been drawing unaffordable mortgages and run credit card debt beyond their means.

[Expat Brad]

Many young Thais particularly males simply put their hands out & their parents give the cash to them.......why save, they only need to ask. Until the day comes & it will that the old money dries up due to the parents self induced spiraling debt & they are going to be well & truly stuffed. These kids, the adult Thais of tomorrow have absolutely no knowledge or skills regarding the use of money other than spending it as quick as possible.

As a visitor talking to HOTEL staff, waiters, sales people - the usual when one comes for vacation - I found that the situation is reverse: many young people working in at least tourist industry come from rural areas and actually support their families/parents back there.

Agreed that certainly does happen. I live & work just outside of CM & I see it. Somchai gets a new motorbike or iphone after he just passes his school year, I mean just passes or he or she just wants one & the parents stupidly buy it, whatever.

Maybe this observation could placed to another topic but over time I have noticed time after time this for example : A male & female (Thais) are at a restaurant & 9 times out of 10 it is the female that pays the bill or the male actually takes money from her purse to pay it. Similarly at say 7 Eleven. Male Thais seem to have no control on their spending thus bleeding their GFs OR are they smarter than others by not spending their own money. I doubt it is the later.

[timber]

How many adults have meaning financial knowledge of how to sucessfully invest money? Who is going to guide the young people on what they should invest their money in? How many people involved in the financial scene

in Thailand put the education of the young people in financial matters before their own?

[Bluespunk]

That paragraph about the German woman is surreal. Where did that come from?

[taony]

Couldn't read past the second paragraph

[12DrinkMore]

I sadly during my working years listened to all that government garbage about saving for retirement. Well I am there now and what have I got? Almost zero percent interest on my savings (geeze I could have had a ball with this money over the years) 1.7% increase in my pension when the cost of living is over 5%. If I was a retired German I would have to pay the bank to "park" my money. Yes my money is in the bank and being lent out to people that did not save a nickle in all of their working years. These people are the new "saviours" of the world. They get money for almost nothing from the banks and then turn around and buy new cars, electronics homes with big mortgages with more square feet than they need. They are the new product junkies that turn over their electronics every 2 years. These are the consumers that will move the world forward. They are the consumer spenders that governments hope will lift us up out of all the problems that governments and the banksters have created. Sorry I have got to quite typing before I vomit again.

It is not just the retired that get nothing, it is everybody.

There are two issues here.

1. Economies are built on credit and buying stuff today that will be paid back tomorrow, naturally with interest payments to the banks.

2. The "Powers that Be" in the developed economies are desperately trying to get inflation running high and also hoping the workers have inflation busting wage increases in order to pay off the debt.

But there is a huge wave of deflation with oil prices falling, and the developing nations producing ever cheaper stuff.

In order for workers to have inflation busting increases they have to be in the public sector, where making a profit is not required, or increase productivity in the private sector, which is only achievable through wage decreases, negating the objective, and with the forlorn hope that the company directors will even allow the increased profits to filter down.

Going forward I expect to see the western currencies sinking further, the GBP is now out of kilter with Europe and will surely take a hit a few months after the election.

The world is finally re-balancing between the profitable producers and the indebted consumers.

The next twenty years will see the swing from the West to the East.

Try and prepare yourself........