Indian weddings are called ‘big fat’ for a reason. Often, too much money is spent to make the affair lavish.
A cousin of mine was to get married in May this year. But due to the lockdown, the wedding was postponed for later in the year. And what was expected to be a 500-plus people affair is now expected to be a much smaller one. Due to family reasons and as is quite common, having a grand wedding was my cousin’s plan. I was told that the total estimated combined expense for both sides was to be about Rs 25 lakh.
But now, both sides have agreed to have a quick and easy wedding, restricted to the immediate family and friends. And fewer guests definitely mean a wedding that is easy on pocket. They have estimated that the entire wedding can now be managed in about Rs 7-8 lakh.
This lean wedding will therefore help both sides save a total of about Rs 17-18 lakh. That’s not a small sum.
Though my cousin wasn’t fully happy, I tried to show him the brighter side of this.
Simple calculations show that if he gets about Rs 15 lakh of this excess money as a gift, then he can turn it into a really big amount if invested for long. He is 30 now. Assuming the money is invested at an 8 per cent return for the next 30 years, it will become a very solid Rs 1.5-plus crore. That’s a handy amount to have during retirement in addition to savings via EPF (and VPF), PPF, equity funds, etc. And if the money is invested in a combination of equity funds (expected to give 10-12 per cent) and debt instruments (7-8 per cent), then the corpus can be even bigger.
This financial booster at the start of a couple’s life can provide a solid footing for their financial security in the long run.
I am not asking for the entire surplus to be invested for decades. Both are starting a new life and, hence, they can set aside a small amount for discretionary spendings too. This could be for travelling abroad later (once the pandemic is under control) or for furnishing their accommodations more tastefully. But once that is done, a part (if possible, a major one) should be earmarked for their financial goals.
The goals can be saving for retirement (or early financial independence if the couple agrees on it). Or, it can help make a down-payment for your house purchase. Setting aside some of the funds for emergency is also a good idea if the couple has almost no savings to begin with.
Low-key weddings, ideal in current times
No doubt the pandemic is a punch-in-the-face for everyone. No one wants to live like this. But for those planning to get married (and I know many of them wanted to have a big wedding), this restrictive environment isn’t that bad financially. In fact, if the surplus saved is put to better use, it can go a long way in strengthening your finances. You may not realize this now. But it will.
And since we are talking about Indian marriages where parents save for years and then spend an exorbitant amount of money on their children’s wedding expenses, I must address another aspect.
This is for the parents of the bride and the groom.
If you do not have sufficient retirement savings and you were planning to spend a lot of money in your child’s marriage due to societal pressure (at times, by dipping into their retirement savings too!), then please don’t give the surplus saved by having a low-key wedding to your children.
Please keep that money for your retirement!
Indian weddings are notorious for being financially draining. And this pandemic has reminded everyone about what’s really important and what’s not. So, if you (or your parents) are saving surplus funds due to the pandemic’s impact, then use this crisis as an opportunity to put your finances in order.
(The writer is the founder of StableInvestor.com)