How To Create A Wedding Budget Without Compromising Your Other Financial Goals?

Weddings are among life’s most joyous occasions, but they can also be one of the most expensive if not budgeted carefully. While many couples would want to hold a grand celebration, balancing costs with long-term financial goals could be a challenge for many couples.

According to a recent report by WedMeGood, a wedding firm, the average wedding budget in 2024 year is around Rs 37 lakh, a 7 per cent increase from last year. Destination weddings, the epitome of luxury and exclusivity, are costing over Rs 51 lakh on average.

As families or couples set out to plan a wedding two questions weigh heavily on the mind, i.e, how much is too much? What should we prioritise?

These are questions that every couple/family grapples with. Financial experts, however, have a fascinating way to think about this: they categorise people into three "wealth generations" — not based on age but on financial standing and goals.

Says Animesh Hardia, a chartered financial analyst, and senior Vice President of Quantitative Research at 1 Finance, a personal finance advisory firm, it is crucial for couples to consider wedding expenses in the context of overall financial planning to create a balanced wedding budget.

To make this balancing act easier, financial experts approach budgeting for individuals based on three distinct wealth generations. The concept doesn’t refer to age but rather to an individual or family’s wealth generation/income sources.

By realising their wealth generation categories, namely, Generation 1, Generation 2, and Generation 3 couples can create a wedding budget that feels right for them while not compromising other financial goals. The varying wealth generation groups can be understood as:

Generation 1: These could be families that are focused on basic sustenance such as a small shop owner supporting multiple family members.

Generation 2: This group refers to well-educated professionals such as teachers or mid-level managers who could show a little flexibility with their finances when it comes to budgeting a wedding.

Generation 3: This refers to families or couples that have a significant financial cushion such as a successful entrepreneur. The couples in this wealth generation group could afford to spend around 30-40 per cent of their savings on a grand wedding without impacting their long-term goals.

Adds Hardia, regardless of generation, it is crucial for couples/families to consider wedding expenses in the context of overall financial planning. Here's how different wealth generation group can limit their wedding budget:

• Generation 1: Limit wedding expenses to 20-30 per cent of annual income

• Generation 2: Consider 30-50 per cent of annual income

• Generation 3: May allocate over 50 per cent of annual income

“However, these percentages should be adjusted based on individual circumstances. For example, a Generation 2 couple saving for a home down payment might lean towards the lower end of their range or extend their saving timeline to accommodate wedding expenses,” Hardia states.

To create a budget that doesn't derail your overall financial standing, Hardia says it is wise to reserve 10-15 per cent of the wedding budget for unexpected costs.

To avoid overextending couples can:

• Set a clear budget early and stick to it

• Prioritise wedding ceremonies that are most meaningful to them

• Consider off-peak dates or non-traditional venues

• Do-it-yourself (DIY) where possible (e.g., planning invitations, favours)

• Be transparent with family about financial limitations

“For example, a Generation 1 couple might focus on having all their loved ones present, even if it means a simpler menu. A Generation 2 couple could splurge on photography but opt for digital invitations. A Generation 3 couple might choose an intimate destination wedding instead of a large local event,” Hardia states.