Come December and it's the wedding season. The grandeur, tinkling of jewellery, anxious parents, excited brides and grooms - no matter where you live, you cannot miss the celebration, the promise of a shared future. Weddings, like any other important social event, come with a lot of surprises.
Managing a wedding budget and being prepared for the finances involved during and after is not an easy task. One should always be prepared for unexpected expenses that might come up either during the wedding, or after it. Given the emotions attached with the event, things can easily get out of control (budget). In such a scenario, handling finances is not easy and people planning a wedding for the first time are particularly susceptible to under-budgeting.
While planning your wedding, there are things that are nice to know, and then there are things that you need to know. Here are five quick checks:
Know what happens in a wedding: Before you start planning, there needs to be a detailed family discussion – charting the events (including look, theme and feel) that precede and follow the main event. This will help you draw up a cost estimate at a macro level. Now, break down each stage into smaller events and run through the items involved in it. Prepare a detailed budget and manage all transactions for the wedding from a separate bank account. This will help in covering all the hidden and extra costs at a micro level.
Don't forget to consider the miscellaneous expense: Factors like renovation, renting or buying a new house, planning for a vacation, purchase of a new car etc., should also be carefully considered, in addition to the main event. While expenses for a wedding come in various forms, one should take advantage of loans offered by banks to meet these expenses, to ensure that your savings remain protected.
Be a master at personal financial management: There are plenty of tools, apps and trackers available to help you managing finances. Additionally, you may also opt for loans that can help you meet the expenses, through secured and unsecured instruments like credit cards, auto loans, personal loans, home loans, etc., in order to maintain strong financial health. It is also recommended that you consider one or two banks for such loans, as it becomes complex to manage debt beyond two. Having all products with one bank will give you better bargaining power on rates. You must also avoid making multiple inquiries for loans at banks as this can lower your credit score.
There can also be various unavoidable circumstances that could tarnish the memories of a wedding. A wedding insurance will safeguard you against any financial loss caused by some of these risks. By taking a cover for the wedding, you are cushioned against a lot of unforeseen misfortune. For instance, you may have created a set for your wedding with immaculate decorations which unfortunately gets spoiled due to fire, flood or any other calamity. Here, your insurer will take care of the financial loss incurred due to this calamity.
Be prepared for going overboard with your budget: Delays and changes in plans are usual while planning an elaborate Indian wedding. Hence, having a 5-10% buffer will help in managing these unplanned expenses.
Plan to raise monthly savings and investments; invest early and spend wisely: It is also important to plan for life after marriage. You need to at least save 10% of your net income for long term goals. With a wedding, this may go up to 15%, considering children, bigger home, healthcare, education, etc. The IPS theory helps in prioritising this.
I- investing first
P - protecting the savings and then
S- spending the rest
Investments need to be started early for kids' education, retirement, and so on. There are several low-risk options for the short term such as fixed deposits, recurring deposits and debt mutual funds. For the medium and long term goals, one may invest in equity, equity mutual funds, sovereign and corporate bonds, PPF, gold instruments and realty. It is recommended to have a mix of the above to manage risk and maximise returns. For protecting the family without affecting savings, one must avail sufficient life and health insurance.
A wedding is none short of a grand event of life, and it is important we make it memorable. Be a bit mindful about expenses, ensure value for money and start saving early to make it an event of a life time. A diligently planned wedding can only bring in more happiness without having to worry about the finances.
A SECURE KNOT
- Factors like renovation, buying a new house, etc., should also be considered
- Having a 5-10% buffer for the expenses of the wedding will help
- You should save 10% of your net income for the long term
The writer is group head - retail lending, YES Bank
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