Category: Financial Planning

Planning for Child’s Marriage.

Should I plan for child’s marriage? How much importance should I place on my child’s marriage as a financial goal ?

The future is unknown and uncertain! Parents are absolutely clueless about how their children will grow and what they will grow up to be. A parent not only wants the children to have a good education, but also wants to celebrate their life’s important occasions like marriage.

In order to fulfill these duties, it is imperative that one follows the right approach towards planning for important financial goals, marriage being one of those goals.

How much should I really save for my Child’s Marriage?

Let us see an example.

Mr Singh has a daughter aged 3. He wants to create a marriage corpus that should be ready for her daughter when she is 24 years. Currently, the marriage expenses should be Rs 16 lakhs if it were happening today. How much would he save for his daughter’s marriage every month to get her married after 21 years?

The Marriage corpus calculation comes to as given below :

Mr Singh’s child’s present age (in years): 3

Age at which the child will be ready for his/her marriage (in years):24

How much expenditure will he incur on the marriage? (at today’s price): Rs 16,00,000

What is the rate at which you expect these expenses to inflate by every year? (%):8 %

The future cost of Mr Singh’s child’s marriage after 21 years would be : Rs 80,54,134.

Expenses of marriage today 16,00,000
Inflation 8%
Corpus of Expenses when saving for 21 years till  marriage Rs. 80,54,134

Mr Singh needs to save Rs 80,54,134  to realise this financial goal.

It is obvious that the earlier one starts investing, the less a person needs to invest each month to achieve the same amount of money at the end of the goal.

What strategy should I adopt while planning for my child’s marriage?

Selecting the ideal portfolio mix (Equity, Debt, Gold) is an important task in this regard. Many investors are hesitant to put their savings in the stock market due to volatility.

The investment portfolio created for children should be equipped with adequate term insurance to meet the objective of protection without having to pay for huge charges and commissions.

An insight into different types of wedding events and wedding costs of different communities in India.

The rise in affluence has transformed the Indian wedding into a lavish affair. Every little thing from the venue, to the decorations, to the food, has to be the best.

When US born Janki and Srinivasan decided to get married, they ditched Florida and Las Vegas for Jaipur as their wedding destination. Since a lot of people now prefer to combine wedding with holidays, destination marriages are in. In Mathura in Uttar Pradesh, a traditional Jain family, which has lived in the town for six generations, is planning a beach wedding in Goa this February, which will double up as a holiday for family and friends.

A destination wedding in Goa for 200 people could easily cost upwards of Rs. 1 crore.

The fee for making weddings memorable is quite steep — wedding planners charge 10 per cent of the wedding budget as consultation fees.

While for most upper class people wedding budgets start at Rs. 70-80 lakh, it can go up to even Rs. 10 crore for industrialists and businessmen.

And the Marwari wedding just got bigger and fatter as the business community begins to splurge.

Wedding cost for the upper middle class in metropolitan cities varies anywhere between Rs 25 lakh to 70 lakh.

A person, in India, spends one fifth of the wealth accumulated in a lifetime on a wedding ceremony.

Given the above scenarios, saving in advance for the child’s marriage is no doubt an important and a necessary financial planning goal!!

Education planning is far more important than marriage planning !

One should prioritise and invest in the child’s education instead of saving up more for his/her marriage. It is better to make the child so accomplished and independent that he/she is capable of crafting own secure and happy future.  Thus, education planning should be given more importance over marriage planning,

However, notions are gradually changing in modern times.

Parents in India, when presented with different options for supporting their child financially in life, said they would ideally allocate 33% of their funds to their child’s education, much more than anything else. The next most important priorities are funding their child’s wedding (14%), financial support for starting a business (11%) and long-term investment funds (11%) according to a new report from HSBC, The Value of Education: Springboard for success.

Interesting facts about the big–fat Reddy marriage

Before concluding on the topic let us have a quick look at some interesting and  astonishing facts and figures with regard to the wealth which was splurged by Gali Janardan Reddy on the grand occasion of his daughter’s marriage.

  • Mr Reddy is rumoured to have spent Rs 550 crores on his daughter’s wedding.
  • He has reportedly spent over Rs 5 crores on the invitation cards.
  • He has shelled out Rs 10 crores on the event management.
  • Rs 20 crores on transportation of guests.
  • Rs 5 crores on the invitation cards.
  • Rs 20 crores on food to be served on the occasion.
  • Hundreds of crores on the jewellery and costumes for his daughter and family.

Definitely the Reddy marriage should not be an example to be followed while deciding on the corpus of a child’s marriage! But, yes, it is every parents’ dream to arrange for a memorable and lavish wedding for their child.

And, it is possible to fulfil the dreams a parent has for children with the help of sound financial planning and suitable asset allocation.

Debalina Roy Chowdhury

Dilzer Consultants