As part of the Firstpost series on financial planning, we have covered several topics – from financial planning for a nuclear family to that for same sex couples and from 20 somethings to the retired-but-working people. While we said financial planning principles remain the same, their application changes with time. Today, we bring a financial strategy for those planning to get married. Read on, to know more.
Your Life: So, you’ve decided to get married. It could be a marriage where the families played cupid, or you both got arrowed by the cupid. You are planning to tie the knot in a year or two. It’s a once-in-a-lifetime event, which means, it needs a lot of planning, especially in financial matters. We bring you few financial planning things to keep in mind, just before and after the big day.
Discuss: Discuss money prior to marriage. Surya Bhatia, a Delhi-based Certified Financial Planner, says, “Even before marriage, it’s good to discuss the financial structure – whether it’s going to be separate accounts, or joint and the like.” Have clarity regarding money matters right from the beginning. This helps avoid confusion as to how money is going to be handled in the future.
Funding the day: Well, if you are lucky, your dad will be more than happy to foot the bill. If you are luckier, your would-be spouse’s dad may also be the sponsor. But, if you want to do it on your own, or give them a helping hand, here are a few things to keep in mind.
Let’s assume you need the money in a couple of years for the big day, what should be your strategy? Ranjit Dani, a Nagpur-based, CFP, says, “You should make your fresh investments in accruable debt mutual funds based on the time period you are looking into. As far as previous investment go, if they are in equity, you should gradually move them into debt instruments like debt MFs as well.”
For those who don’t have a lot of funds, taking a personal loan isn’t a great idea. Bhatia says, “Personal loan will easily cost you 16 percent interest rate, instead withdrawing your PPF is a better option.” He adds, that you could easily pay the extra amount you would have paid as EMI for personal loan, into the PPF account later. After all, PFF give your 8.6 percent tax free investment avenue. Kiran Telang, a Mumbai-based CFP, says, “An overdraft against a fixed deposit is also not a bad idea. Also the cash credit accounts with the bank.”
Gold: Ideally, you should not have more than 10 percent of your portfolio on gold. But, it’s for a wedding, and there is a good possibility that you want to, or you are under pressure to buy gold. Planners say, if it’s for personal consumption, you should buy some gold. Do not worry about speculation and high gold prices.
“Don’t buy any kind of wedding day insurance, that’s like planning for worse,” said a planner. Though, there have been instances of no guests turning up due to a suddenly declared bandh in the city and all that jazz. But, it’s your call. After all, it is you who know how much you’ve spent on the wedding.
Gifts: If you are lucky, you will get half a dozen tea sets or half a dozen pressure cookers as wedding gift. But, if you are luckier, you might as well get a substantial amount. If you’ve taken a loan for the wedding, this money should go towards that. If not, you can spend that on honeymoon expenses. After all you marry but once.
Ideally, it takes a few years after marriage to settle down properly, know each other and know the direction where your career is going. So, renting out for the initial couple or years is not a bad idea. After that may be buying your own home could be a financial goal you would like to work on.
Shaadi Mubarak in advance