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Financial planning for marriage expenses

For most parents, marriage of their children is a happy time, but for the bride's parents, it is a trying time with taking care of all arrangements and keeping everybody happy and satisfied.
You need to PLAN and START saving TODAY or

have to take wedding LOAN later....

Choice is yours ....
Weddings are a grand affair in India and require a lot of planning. The Indian wedding industry is about Rs 1, 00,000 crore and an ASSOCHAM report states that it is growing at a rate of 25% to 30 %. While we have all dreamed about having a fairytale like wedding in some point in our lives, we often forget or neglect the planning and preparation that it requires. However, making your dream wedding a reality is not as difficult as it seems.

How to Save for a Wedding

Indian weddings are known for their lavishness. There’s light, there’s food, there’s song and dance. But the colour you see the most at any Indian wedding is gold. However, all that glitters comes at a cost. Wedding expenses have been rising fast. While no data is available regarding the same, anecdotal evidence can tell you that  weddings today are more opulent than they used to be.

How Much Does a Wedding Cost?

The amount you’ll spend for a wedding can vary greatly, depending on how big (or small) you decide to go. Comparing some numbers for the average wedding costs can put what you may spend in perspective.

Start investing

Planning early for a wedding – even if you do not know the exact date – is always a good thing. Starting to plan early will allow you enough time to accumulate money. For one thing, it allows you to set aside smaller sums, which is more manageable than one or two large lump-sums. You will be able to slowly build up to the amount required.

Where do you invest?

As said earlier, equity is a great option if you have a longer timeframe. If the wedding is at least 15-20 years away, include about 25-35% of your savings into equity. Rest shall be in safe investments methods.

The equity portion can be in the form of aggressive hybrid funds or moderate-risk pure equity funds (typically, funds that are oriented towards large-cap stocks).

Steps To Plan For Your Child's Wedding

Step 1: Start Early
To accomplish the dream of getting your child married begin saving and investing early —perhaps when he/she is a toddler.

Starting early has a variety of benefits:

  • Permits you to take a relatively higher risk and invest in equity mutual funds and    benefit from potentially higher returns in the long run
  • Helps to benefit from the power of compounding; and
  • Allows you to contribute smaller amounts regularly over longer periods

Daughter's Age:     2 years
Cost of Marriage today:     Rs 15 lakhs
Time Left for Marriage:     22 years
Inflation Rate:     10% p.a.
Cost at time of marriage:     Rs 1.22 Crores
Amount YOU need to invest per month:     Rs 9,516 (which can fetch a return of 12% per annum).

However, if YOU delays this investment, and starts to invest for YOUR daughter's marriage after 5 years from now, YOU would need to invest almost double i.e. Rs 18,464 per month.

Hence you see, the earlier YOU start investing, the less stressful it will be for you to achieve this goal.

Step 2: Rationally Estimate Wedding Expenses

Focus on YOUR budget as there are other vital financial goals to fulfil as well like your child's education and your own retirement, among a host of others.

While estimating the wedding expenses, take into account the present value i.e. the amount you would have spent today on your child's wedding on a rational basis.

Step 3: Follow An Asset Allocation

Different asset classes have different attributes. Hence, a mix of all or some is important.

For instance, equity is a must for your long-term goals. But you may include gold as an asset class which can be a hedge against uncertain times.As the goal nears, you may rebalance your investment portfolio gradually towards fixed income or debt.

Step 4: Get Insured Optimally

Step 5: Avoid Creating Any Debt

To get your children married, save for the financial goal, but ensure that you’re biting only as much you can chew. Start planning for your goals early. A longer investment horizon can facilitate better power of compounding.

Don’t divert any investments already assigned for other vital financial goals like child’s education, your retirement for your child’s marriage.


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