Financial planning for your wedding involves listing out expenses and allocating funds
Financial planning has become an essential part of making the future more secure, and one basic rule is to ensure that the planning process begins early. An early start can be especially effective when it comes to planning for a big event like a wedding, where there is also a large cost involved.
If there is a separate amount already set aside for the wedding expenses, then half the worries are taken care of but in many cases it is very likely that the event is just a few months away and there is no clarity on the final expense bill and how it will be funded. At this stage financial planning can play a very important role. Meeting the various expenses through the available and possible means, is a challenge that has to be faced.
While the estimate of expense for the marriage will vary significantly among different people depending upon the scale of the celebrations, one can look at the various events and then draw out a plan as to how this will be funded. Proper planning and estimation here will ensure that the cash flow matches the needs and the financial issues are taken care of.
The first thing to do is to get a complete picture and for this one has to consider the entire gamut of expenses that will be incurred. This is very difficult to achieve and needs quite a bit of work because new expenses keep popping up at regular intervals. The process should start a few months before the event and will continue even after the marriage is over. It also requires effective spacing out of the inflows so that the cash flow stream is maintained.
In the months before the wedding, the process of booking the hall or space for the reception or other events related to the wedding and in some cases even hotels for guests takes priority. This may require a deposit as an initial expense. These amounts can run into several thousands and in percentage terms the actual payout at this stage can be between 5-15 percent of the total expenses. The first round of funding could be required at this stage and in most cases there is need for liquid cash. Booking the hall in advance is necessary, as it might not be available later. The rules and regulations are different for individual locations, and some insist on a cash payment.
The next stage is the prewedding shopping that requires the purchases ranging from jewelry to clothes and other related materials. In most cases, about 30-35 percent of the total budget is spent at this point. Much of the total expense is thus underway or complete even before the actual event. Investment planning should be in a way that low yielding money that can be easily accessed is used for these purposes. Investors can make use of liquid funds or short term debt mutual funds schemes or sweep in savings accounts to match their convenience.
This will be followed by the printing of wedding cards and other related expenditure. One can make use of various routes for meeting these expenses and a bit of homework can pay rich dividends. For example, credit cards could be used to space out the expenses along with actual payments, especially if the required amount is paid back by the due date. This would be a convenient option without any additional costs. One has to take extra care in order to ensure that one does not slip into the interest trap here. Plans can run aground if the dealer charges an extra amount for credit card use. In such a situation shifting to cash payment could save the amount.
From this time to the actual wedding date, a lot of expenses appear at short notice. In order to meet them, individuals can make use of liquid funds/short term funds. The mode of operation of the funds will ensure that there is adequate liquidity so that one can take out the money, when the need arises, with a slightly higher post-tax return than other options. For the actual event there will be another round of spending.
This will include amount spent on the function and catering, in addition to looking after guests. Ensuring that there are enough funds without any shortage of cash is the main objective. At this stage a mixture of cash and cheques might be used but funds have to be available for this purpose.
One key component of the entire plan would be that there has to be a contingency amount that is stashed away, so that any overrun is met effectively. An overrun is most likely and this will happen after the event as the expense list will keep rising as the bills pour in. Running around trying to arrange the funds at the last moment could lead to financial decisions that might not be wise.
Another principle to be kept in mind is to ensure that not too much debt is piled up, as the actual implication is known only later.
Courtesy: Times Of India
Wedding Preparations 
