Cheers To A Money-Smart Wedding

Bengaluru-based Nazim Sait, 38, and Junaki Barbhuiya, 30, had been dating for a year. “About three months ago, something inside me clicked and I proposed on her birthday. And she said yes!” says Sait. He works with a start-up as the vice-president of finance, while Barbhuiya is the team lead at a medical coding company. Their wedding is scheduled for December 26.

A wedding is usually an exciting, and tense, event. There are many things to decide upon clothes, invitations, menu, venue and so on. All this costs a lot and, therefore, should be planned properly to avoid wastage and going over-budget.

“It is ideal to plan for any event or goal in life and this applies to planning a wedding as well. While drafting out a budget for the event, discuss issues transparently with your to-be spouse to make sure he or she is on the same page,” says A.K. Narayan, CEO, AK Narayan Associates, a financial planning firm.  

Once the wedding date has been decided, start by drawing up a budget. Know how much you can afford and what you want. List down all the possible expenses that are mutually agreeable, and see what they cost. Try to remove things that are not essential. Arrive at a budget. If it looks too expensive (which is often the case), revisit the list of expenses.  

Trimming Away The Extras

Sabari Harsh, 31, and Sneha D.S., 30, got married in Kerala in April 2018. They decided to hire a common photographer and videographer, instead of hiring from both sides. The flowers came from the bride’s hometown, Coimbatore, which has a large flower market where good deals can be struck. Many marriage venues have their own caterers whose rates are usually lesser than those of standalone caterers. You could book a more economical venue or go for a simpler menu. Some bridegrooms- and brides-to-be choose to take their outfit and jewellery on rent instead of buying. Personal e-invites are the rage and help save on the cost of printing and dispatching traditional wedding cards.

There are many such ways that can help keep costs within limits. Being prudent in spending for the wedding not only helps save money now, but also means you have more to invest for another goal or to start off on solid footing in your married life.  

Getting Funds Together  

Assess where you stand with finances. “Check the availability of immediate funds and money that will be available within the timeline of your plan,” says Sujata Iyer Mahesh, head, research and strategy, Happy Investor Finserv, a mutual fund distributor firm.  

If you have about a year left, you can save up systematically. “If the wedding is going to be in the next 12 months, it is better to start saving on a monthly basis to create a corpus. While equity may offer high returns, it is not advisable to invest in it for this purpose as the time period is short,” says Narayan. You could instead save in recurring deposits or liquid funds. However, if the wedding is sooner than a year, one option is to dip into savings. Narayan suggests using a proportion of  your savings.  

As far as possible, savings should not be disturbed because while a wedding is an important milestone, it cannot be conducted at the cost of other goals such as building an emergency fund.

Moreover, as marriage is usually among the financial goals that people set, you may already have money set aside for it. Sait chose to start investing well in advance. “I have been investing in mutual funds and stocks for a few years. Since the financial markets have reaped good returns, I could dip into my existing investments and partially exit the portfolio. I was able to use my existing investments,” he says.  

Look at other sources as well. “If you have bank fixed deposits, check with the bank if you can take an overdraft loan on these instead of breaking them. You can pay back in instalments. This works better than losing interest due to foreclosure,” says Mahesh. If you have mutual fund investments, you can take a loan by using these as collateral, and pay back over time.

You can also avail of a wedding loan, which is basically a personal loan with a different name. However, this should be the last option as such loans come with high interest rates. Plus, once the repayment kicks in, it will affect monthly cash flows. If you take such a loan, close it as early as possible.

Most of us use credit card for convenience and the delayed payment they allow. But the ease of use also lulls us into over-use. “Avoid making too many purchases on credit cards which you cannot pay back within the month. Revolving credit on credit cards is the most expensive (type of loan) as you will end up paying almost 36 per cent per annum interest and interest on interest,” warns Mahesh.  

Kolkata-based Ankush Sahi (who did not want to reveal his name) is getting married soon. The original plan was to get married later but due to serious health issues in the family, the wedding is being held sooner. Sahi has taken a personal loan of Rs 5 lakh for the wedding. “I had no other option, but I plan to pay off the loan as soon as possible,” he says.  

Consider Wedding Insurance

This is an oft ignored aspect. Most people consider it an unnecessary expense and prefer to take their chances. That’s a big risk to take. Wedding insurance ensures that the event is covered for any financial losses due to unforeseen circumstances, theft during the marriage, an unexpected illness of a family member, and more.

“The policy can be taken closer to the wedding date also. If the policy is taken to include postponement of wedding or cancellation, even non-refundable deposits can be claimed,” says Narayan.

Wedding insurance, typically, covers the cost of the invitation cards, deposit or advance to the wedding location, caterers, for decoration, hotel reservations, travel tickets and more. It is easily available and the premiums are usually based on factors such as the venue, contingency plans, event duration, cost of organising and others. The premium is usually 0.5-2 per cent of the sum assured.

Starting A New Life Together

Once the wedding ceremonies are over, the guests have left and the high levels of energy are slowly coming down, real life settles in. Starting life together also takes some preparation, even in terms of finances. You need to consider various factors: Will you be living on your own or with the extended family? Will both of you work or not? Will you switch jobs or cities or take a career break?

“Get an idea on what would be the expected income. Then estimate monthly expenses and the balance disposable income available. Couples also need to decide how they will share responsibilities and handle their finances. It is recommended that you draw up a monthly budget across different items and try to keep within it as far as possible. Keep individual bank accounts for salaries and pool in money into a common account for expenses,” adds Mahesh.   

Apart from setting a monthly budget, concentrate on building an emergency fund to cover for at least six months of expenses. Buy or expand adequate health and life insurance. You can opt for a joint term policy that covers both of you under the same policy as the premium may be less than for two separate plans. “It is a good way to begin with, even if the cover is a little lower,” adds Narayan.

Once you settle, plan for your life ahead. “There is no need to panic or rush. There is enough time for saving and investing,” says Narayan. Avoid rushing into buying a house or taking a home loan or paying higher EMIs to begin with. Job uncertainty is high and there is always the possibility of having to move to another city for work.  

It is important to have money conversations at the start of the relationship to understand each other’s outlook. Money can become a sore point if there is lack of transparency between the partners. “Once the couple is more comfortable talking about finances, they can plan their future investments together,” says Mahesh.  

“Both of us are financially independent. It’s important to discuss finances to be transparent about future plans. We have decided to continue working and contributing till we start a family,” says Sait.

Getting your finances in order is part of setting a firm foundation for a happy married life.

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Steps To Planning A No-Money-Wasted Wedding

It is possible to limit what your wedding costs if you follow a plan.

• Both partners should discuss the important things honestly with each other
• List out all the big-ticket items such as venue, caterer, decorator, clothes, jewellery etc., and the other items separately
• Get an estimate of what these will cost
• Trim the list of all possible non-essentials
• Look for cheaper options in, say, choice of decoration, caterer or choreographer

Getting The Money Together

As much as possible, plan in advance. If you take credit, pay back at the soonest. Here are some options:

• Overdraft on fixed deposits
• Loan against mutual funds
• Withdrawing some amount of investments
• Taking a wedding/personal loan
• Dipping into savings, but turn this way only if you have to

meghna@outlookindia.com