Weddings are special events where two families together to celebrate the union of the bride and groom, and over the years have only grown in size. The big fat Indian wedding includes exotic locales, scrumptious food and stunning décor, not to mention drool-worthy goodie bags for the guests. Of course, intimate dos are also chosen, but there are individuals who come up with creative and extravagant ways to celebrate their union.
"Whether modest or large, weddings can be costly affairs that necessitate a great deal of organisation and financial input. The good news is that with savvy financial preparation, you can easily enjoy the wedding of your dreams, whether it's a modest private occasion, a destination wedding, or a big five-star party," says Anu Jain, Head Broking, IIFL Wealth Management. She offers important financial planning tips.
Plan And Pay
The thing about weddings is that it is difficult to plan for them years in advance. No doubt your mother must have tucked away some jewellery for the occasion and your father must have created a fixed-deposit that he intends to break. Yet, for you to personally set aside money for an event that is far into the future might be challenging. So, here is what you can do.
Determine A Time Horizon: You can estimate when you would like to get married. For instance, if you are in your mid-twenties, you might want to get married within a decade. Maybe you are in your early twenties and don’t envisage a wedding at least in the next 15 years. Or maybe your wedding date has been set 18 months from today. Whichever option it is, the timeline will give you a fair idea in terms of how long you need to invest, and, more importantly, where you can invest.
Do A Fair Assessment Of Costs: Simple weddings might not shake your bank balance much, but elaborate weddings can definitely burn a hole in your pocket. You can categorise the expenses within a broad range based on what your dream wedding looks like. This could range from Rs 20 lakh to over Rs. 1 crore. Having a fair estimate of the cost will tell you how much money you need to invest and the return that you need to generate to be able to afford your dream wedding.
Evaluate Investment Options: Based on your time horizon and expected costs, create a customised wedding fund. If your wedding is more than 10 years away, then you can definitely afford to allocate a greater proportion of your wedding fund in high-risk instruments like equity mutual funds with a smaller allocation in a mix of balanced advantage funds and debt instruments. If your wedding is expected to take place in the next five years then you should probably create a balanced portfolio spread between balanced mutual funds and debt instruments. On the other hand, if your wedding is only 12 to 18 months out, then you should consider investing in only debt instruments. Whichever option you choose, ensure that it is aligned with your ability to take risk and has the potential to generate the necessary returns. In addition to creating a wedding fund, you should also create a good exit plan. This means that as you get closer to your wedding date, you must redeem your high-risk investments and move that money to safer instruments. This way you can generate the necessary returns and secure them.