A Child’s Marriage is one of the most important events of a parent’s life. You dream of hosting a lavish event to mark a new beginning of your child’s life. And since time flies faster than you think, it is important to plan for a grand celebration while your child is still young.

“If there must be trouble, let it be in my day so that my child may have peace” – Thomas Paine.

As rightly stated by Mr Paine (a famous English-American political activist, author, political theorist and revolutionary), this is what every parent wishes for. As a parent, you not only want your child to have a sound education, but also celebrations on important occasions for your little one, not to mention a grand wedding. But in order to fulfill these desires, it is imperative that you follow the right approach towards planning for your financial goals.

While planning for your child’s needs, it always pays to start early. This is because if you start saving and invest early, it will give you a larger time horizon to meet your financial goals (such as child’s education and marriage) and even build a bigger corpus.

Let’s take an example…

Example: Mrs Gupta has a daughter aged 2. She wants to create a child marriage corpus that should be ready for her daughter in 22 years. Currently, Mrs Gupta imagines that she would spend Rs 15 lakhs on her child marriage if it were happening today. How much would she need to save for her daughter’s marriage every month to get her married after 22 years?

• Daughter’s Age
• Cost of Marriage today
• Time left for Marriage
• Inflation rate
• Cost at time of marriage
• Amount Mrs Gupta needs to invest per month

– 2 years

– Rs 15 lakhs

– 22 years

– 8% p.a.

– Rs 81.55 lakhs

– Rs 6,356

The Child marriage expenses after 22 years rise to Rs 81.55 lakhs due to inflation. And an investment of Rs 6,356 every month (assuming it earns a return of 12% per annum) will help Mrs Gupta to realise this financial goal.

However, if Mrs Gupta delays this investment, and starts to invest for her daughter’s marriage after 5 years from now, then she would need to invest almost double i.e. Rs 12,331 per month. Hence you see, the earlier you start investing, the less you’ll need to invest each month to achieve the same amount of money at the end of the goal.

Today, most parents save for meeting various needs of their children, but it is important to understand that saving alone is not sufficient. It is vital to save an ‘appropriate sum of money’ and invest it systematically in suitable investment avenues. Simply, saving money in your savings bank account will not earn high returns, and might not enable you to create the necessary corpus to meet your financial goals. Hence you must select the right investment options so that your portfolio progresses towards each of the financial goal set for your children’s better future.

Child Marriage – Key points to keep in mind :

• Before preparing a financial plan, you must evaluate your children’s future needs, and then start working towards chasing those ‘need based goals’. Forecast the expenses that may arise in future
• Begin the process of saving and investing early. This will enable you to create an adequate corpus for the fulfillment of your children’s desires, ambitions & marriage.
• The financial decisions which determine your asset allocation and portfolio mix should be backed by your risk tolerance level (Income, Expenses, Financial responsibilities etc.) and risk appetite (Age, Past experience etc.)
• Never dip into the funds saved for your other priorities (Retirement, Medical expenses, Housing rent etc.) to fund your child’s education. It would be sensible to plan your finances better, preferably with the help of an expert financial planner
• Never get carried away by names of financial products. Evaluate their characteristics and viability before making any ad-hoc investment decisions
• Always maintain an adequate insurance cover to cater to the expenses of your children (such as marriage or pursuing higher education) which may arise after your unfortunate demise
• It is prudent to keep your investments and insurance separate