The marriage needs of children remain one of the top priorities of parents. "Really tense. I'm the bride's mother.", says Mrs. Sharma. Avantika is her only daughter.
She is marrying Avinash, her long-time friend. Moreover, Avantika being the only child, her parents thus have big plans for their wedding.
It is thus the dream of every parent to make the wedding of their children a memorable one.
Weddings are a musical and happy affair.
But, alongside such fanfare, there is thus an equal concern over the 'expenses.'
So, to follow these dreams you must have a sound financial plan in place.
It is thus imperative to have a proper approach towards such costs as it will ensure peace of mind to you and your family.
In This Article
- What Steps To Take For Children's Marriage Needs?
- 1: Begin as soon as possible
- 2: Rationalize the expenses
- 3: Pick your Asset allocation as per your comfort
- 4: Invest Prudently
- 5: Insurance is vital
- 6: Avoid Sinking in Debt
- What is a Wedding Loan for Marriage Needs?
- What are the eligibility criteria to avail of a Wedding Loan for Marriage Needs?
- Why consider a Wedding Loan for Marriage Needs?
- Conclusion
What Steps To Take For Children's Marriage Needs?
Step 1: Begin as soon as possible
While you plan for your children's marriage needs, it is important to start early. This is because if you begin to save and invest early, you will have to get a longer time duration to meet your goal. Moreover, you will also be able to build a bigger corpus.
Brick by brick, a house is built.
Therefore, to achieve your goal of marrying your children, start saving and investing early, in their infant stage itself.
Also, the benefits of investing early are many,
1. Gives you a chance to take greater risk by investing in equity mutual funds, and thus the potential for higher returns.
2. Power of compounding is on your side.
3. You can make small contributions.
Now, let's consider the case of Mrs. Mishra.
She has a daughter currently aged 2. Thus, she wants to build a marriage corpus for her daughter, which would be ready in 22 years.
Moreover, Mrs. Mishra assumes that she would be spending Rs 15 lakh on her daughters' marriage if it were to happen today.
Thus, let's find out how much she needs to save each month to achieve her goal,
| Particulars | Description |
|---|---|
| Time left for marriage | 22 years |
| Present cost of marriage | Rs 15 lakh |
| Inflation | 10% p.a. |
| Daughters age | 2 yrs |
| Cost at marriage time | Rs 1.22 crores |
| Amount Mrs. Mishra needs to invest per month | Rs 9,516 |
As you can thus see, the corpus Mrs. Mishra would require after 22 years, would amount to Rs 1.22 crores, given inflation.
Also, she would have to invest Rs 9,516 per month to achieve the same, which will give a 12% return.
If she somehow delays the investment and begins after 5 years from now, she would have to invest Rs 18,464 per month. Double the initial amount.
As is evident, the earlier you start investing, the lesser you have to spend for your goal.
Step 2: Rationalize the expenses
Avoid falling under the social pressure, rich neighbors.
You must remember that everyone's expense is discreet.
So do not copy anyone else, as their situations might be different.
Thus, focus on YOUR own budget, as you have other expenses like your child's education and your retirement to meet as well.
Now consider the present wedding expense of your child, rationally. Extrapolate the future value of this expense by adding the inflation.
Gradually, work out the monthly investment you would have to make in SIP or systematic investment plans. Please note, that the earlier you begin this process, the lesser you will need to reach your goal.
Step 3: Pick your Asset allocation as per your comfort
It is imperative to have your portfolio as per your asset allocation.
Moreover, an ideal asset allocation is subject to conditions such as your age, risk appetite, income, time to reach your goals, etc.
A good asset allocation will help you reach your goals in a systematic manner.
Also, different asset classes bring different benefits.
Thus, a mix of all or some of them is important.
As you approach your goal, you may rebalance your portfolio, as per the table,
| Duration | Equity | Debt | Gold |
|---|---|---|---|
| > 10 years | 90% | 0% | 10% |
| 8 to 10 yrs | 80% | 10% | 10% |
| 5 to 8 yrs | 70% | 20% | 10% |
| 3 to 5 yrs | 40% | 55% | 5% |
| 0 to 3 yrs | 10% | 85% | 5% |
Step 4: Invest Prudently
You will not be able to make it with the savings only.
You would have to invest in mutual funds through SIP.
It will thus develop a habit of saving.
Moreover, you invest in funds periodically and a big corpus builds over time.
Equity mutual funds may prove beneficial for you if the marriage is more than 5 years away.
Step 5: Insurance is vital
Insurance of the parents is important. In the unfortunate event of the demise of the breadwinner of the family, you might face a setback in achieving the dreams for your children.
Use the human life value calculator to determine the right insurance cover.
Term life insurance plans offer a cost-to-benefit. Thus, they can be considered.
Moreover, having proper health insurance in place will help you deal with medical crises.
Step 6: Avoid Sinking in Debt
Indeed, marriage is a once-in-a-lifetime event, and families wish to ensure its success.
However, Investify is of the view that, if you take on a debt, it will hamper you financially.
As you will take years to repay that debt.
Also, if you feel pressed to take such a debt, only borrow a minimum.
Despite marriage being a happy occasion in our lives, its expenses can leave a bad taste for us if not handled properly.
Families often fall into a trap of societal pressure and spend beyond their means.
You must therefore understand that if you sink in deep debt over one of your child's marriages, you will not only hurt yourself financially but also hurt your child's basic needs.
Often things which is a need for some are a luxury for others.
Thus, cut down on the extra costs as much as you can.
Going for a practical approach to wedding planning can be helpful.
For example, you can pick an affordable venue, limit your guests, go easy on the decor, etc.
You should avoid using credit cards or loans for meeting your wedding-related expenses.
On the contrary, you should use only those funds that you have accumulated over time through investments.
Plan a realistic amount for your child's wedding.
Once decided, calculate the future value of this amount(considering inflation) and begin saving for this target.
The key is to save as early as possible, so you don't have to pay too much for your child's goal.
What is a Wedding Loan for Marriage Needs?
It is a type of personal loan, borrowed specifically to meet the marriage expenses.
More often than not, the marriage expense crosses the budget.
Parents thus borrow from either friends or family.
A wedding loan thus helps in meeting the marriage needs without any hesitation.
It is always best to avoid such a loan.
However, you should first rationalize your wedding costs and avail only the figure that is completely necessary.
What are the eligibility criteria to avail of a Wedding Loan for Marriage Needs?
| Point of difference | Criteria |
|---|---|
| Age Limit | For the salaried employees: 21 to 58 yrs For self-employed businessmen or women: 25 to 65 yrs |
| Monthly income | Net monthly salary is thus crucial. Most banks set it at Rs 25,000 p.m |
| Nature of Employment | Salaried person/Practicing self-employed professional/Business owner. |
| Employment Term | Preference is given to employees with over 2 years of work experience(at least 1 year with current employer). |
| Credit Score | Some banks prefer a CIBIL score of 700, others 750. Desirable is 700 to 900. |
| Minimum Loan Amount | Rs 5 lakh to Rs 25 lakhs. Choose carefully. |
Why consider a Wedding Loan for Marriage Needs?
Indian weddings are an expensive occasion. Moreover, even a low-profile wedding can thus cost a fortune. Thus, it can be prudent to avail of a wedding loan, only when it is pressing.
Consider,
1. Firstly, only apply for the amount that is extremely necessary.
2. Secondly, find out your savings.
3. Thirdly, go for a cheaper option.
4. Fourthly, be within your budget.
5. Fifthly, have your repayment plan in place.
6. Sixthly, have proper insurance.
7. Lastly, inform your spouse and family about the plans.
You should avoid financing your entire marriage through a loan. Use it only for a specific marriage need.
It is not a bad option to go for, but it does mean that you cannot afford it right now. Thus, start saving and investing wisely.
Conclusion
What is a necessity for some, can be a luxury for you. Thus, you should carefully evaluate what you 'need' and what you should 'avoid'.
Marriage in India is a big occasion and often comes with huge expenses. It is thus important to plan for it from the beginning to make it a success.
Wedding planning for children's marriage needs is vital for parents. Investing in a SIP or borrowing a limited amount of money from banks, can be helpful.
Investify presents before you an exciting list of offers and hassle-free financial planning. Contact us today and secure your financial freedom.
Happy investing!
