Financial Health Check

“Money” is an essential factor for living. If you know how to manage it wisely, you’ll live a smooth life. However, if you fail to do so, money will cause you trouble. Imagine on the day you get your salary and then it’s totally gone because all that money gets into your debt. After that, you start creating the new debt or look forward to getting your next salary again. There’re basically 4 financial circles to which most people belong.

  • Living rich (Money is never a problem)
  • Living paycheck-to-paycheck (Spend all the money one earns by or before the next time one is paid)
  • Money stays and money goes (Spend the money for survival)
  • Always be in the red (Never have money left and go for a loan every month)

Everyone should avoid falling into money traps to live a pleasurable life. Money is a supporting tool to drive your life to your goal so it’s good to keep monitoring your financial health once in a while.


Liquidity refers to how assets can easily convert into ready cash so that you can spend it daily or reserve it for emergency situations. Thus, that sum of money mostly deposits to a savings account, Money Market Fund, or some money are kept at home.

What is the best measure of liquidity? Add cash and assets that can convert into cash together and then divide by monthly expenses.

For example, You own 5,000 baht and contribute 25,000 baht in a savings account, 15,000 baht in Money Market Fund. Those are a total of 45,000 baht for investment, and you have 15,000 baht left for monthly expenses. 

45,000 baht divided by 15,000, are equal to 3
That means even if you don’t have a one-baht income, you can still spend money for another 3 months, and after that, you may be short of money. This situation is called liquidity loss and you may end up in debt and need a loan after that.

Can you carry debt all year long?

Add all sources of monthly income together, such as salary, extra income, bonus, OT, etc. And also add all expenses and debt together, such as living costs, water, and electricity, phone bill, house or car installment fees, credit card debt. 

How do you know which one is outweighed between income and expenses? You do that by dividing all income by all expenses and debt. If the result is greater than 1, it means you manage debt effectively; but if the result is lesser than 1, it means your income doesn’t cover expenses and debt. That is a dangerous sign and you need to solve the problem beforehand. 

For example: Your salary is 35,000 baht (420,000 baht annually); bonus 50,000 baht, OT 2,000 baht per month (24,000 baht annually). Total annual income is 494,000 baht. 

Monthly expenses 15,000 baht (180,000 baht annually), debt installment 10,000 baht per month (120,000 baht annually). Total annual expenses are 300,000 baht.

494,000 baht divided by 300,000, are equal to 1.65 

That means you still have enough money for spending and paying debt this year. Anyway, your financial status may be strained and you may face a debt burden if you apply for a loan in the middle of the year. Therefore, avoid getting into debt.

How wealthy are you?

Check your wealth by combining all types of your assets, such as cash, all deposit accounts, and investments like Mutual funds, bonds, gold, land, and house. That is to say all saleable assets.

Check your wealth by combining all types of your assets, such as cash, all deposit accounts, and investments like Mutual funds, bonds, gold, land, and house. That is to say all saleable assets.

How to check? Subtract the value of all assets from all debts. The more Plus result, the wealthier you are. If the result is a minus, it’s critical; even if you sell all available assets, the money earned is still not enough to cover your debt. Thus, if you want to be wealthy, get into debt only if necessary. 


David Bach’s Spending behavior


Financial behavior

Life goal

1st Behavior

Spend as much as you get. No savings.


2nd Behavior

Spend more than you get.

Lifetime debtor

3rd Behavior

Spend less than you get. 10% deductible for savings.

Ordinary people

4th Behavior

Spend less than you get. 20 – 30% deductible for savings.


5th Behavior

Spend less than you get. 50% Total deduction; 20% for savings and 30% for asset investment to gain interest under the concept of ‘Let money work for you’.


Source: “Start Late Finish Rich” Book written by David Bach, an American Financial Planner

David Bach said that the reason most people face financial distress is not that they gain too little income but overspending. Therefore, getting wealthier until you have financial freedom doesn’t always rely on making higher income but spending money cautiously to the utmost benefit, and maintaining good financial health.