Short and simple weddings are the new normal but what can you do with all the savings that were put aside for years together?
Due to government restrictions, families are having to prune the guest list. “You can only have 50 people, so it’s a natural way of understanding the ones who are truly important in your life,” said Shalini Dhawan, co-founder, Plan Ahead Wealth Advisors.
Mohan’s wedding will be attended by up to 50 people, including the caterers, the pandit and others who would assist with the ceremonies. “Since the expectation of ‘return gifts’ reduces, we are saving a significant amount of money,” said Srivatsan, a private wealth management professional.
Gurugram-based Elim Panda, 28, and Arjun Kharbanda, 29, were to get married on 8 April, but the couple postponed the wedding indefinitely just a week before the lockdown was announced in March. While about 500 people were supposed to attend the wedding then, when they finally tied the knot on 5 July, the guest list was reduced to only 40 people.
“Our parents were a bit disappointed because of the small scale, but we were quite satisfied and happy to have taken the right decision,” said Panda, a marketing professional. The couple spent only about 20% of the planned budget, including the venue, photographer, makeup artist and so on.
While Panda and Kharbanda’s wedding was funded by their parents, Mohan and Srivatsan’s wedding in August will also be funded by their parents.
Using the surplus
For the new couple: The dream of a big fat Indian wedding is not viable amid covid-19 which means millennials and their families who saved for the grand affair for years in advance can now put the savings to better use. “I think this is one of the positive fallouts of the pandemic. People have started realizing what is truly important and are spending money on that,” said Dhawan.
Mohan and Srivatsan wish to use the money their parents saved and now plan to gift to them to set up their home. They are also looking to save some for a holiday that they’d like to take once the pandemic is under control globally.
Panda and Kharbanda also have different plans to use the money gifted to them by their parents. “Because we didn’t spend all that we intended to, we plan to save some, invest some and use the rest of the money to take care of the liabilities,” added Panda. The couple plans to pay off of their car and education loans.
Shweta Jain, CEO and founder, Investography, a financial planning firm, said couples funding their own wedding seem to be happier now because the ceremonies are going to be smaller affairs. “A couple I spoke with wanted to travel, but since that was out of the question, they would invest in doing up their home and maybe buy a car,” she said.
Planners said default savings due to downsizing of weddings can help fill one of the biggest financial gaps an average household has—the lack of an emergency corpus. Having at least six-nine months’ worth of expenses as emergency fund is a good start.
“Starting off a marriage with savings gives you the breathing space to take on the new responsibilities and set goals. Starting off with loans (taken for weddings or vacations) could mean mental stress right from the word go which could have an adverse impact not just on the relationship but also on the future. Setting the initial tone is crucial,” said Jain
Don’t forget to buy adequate life insurance if you don’t already have it even if both spouses are working. Also, jot down the money goals you want to achieve together and start investing in line with those goals.
However, hasty decisions could work against you. “Don’t rush to invest all the saved money just because your friend suggested an amazing investment avenue. What works for your friend may not work for you,” said Dhawan.
For parents’ retirement: Indian parents, typically, save for their children’s wedding but ignore building their own retirement planning fund.
Mumbai-based Viyut Sanjay Shah, 26, who is set to get married to Vidhi Manek, 26, in December, said his family had been saving for the wedding for a long time. “Indian families start saving for a child’s wedding from the day he or she is born. In a way, it is the biggest one-time expenditure in the lives of most people and so was it in our case,” said Shah, a chartered accountant.
Shah is expecting the total budget to be reduced to approximately 25% of the original cost. The couple has decided to invest 30% of the surplus towards their parents’ retirement fund. Panda and Kharbanda also plan to clear some mortgages that their parents have.
For parents who’ve not yet saved for retirement, the savings from wedding funds could be the last window of opportunity. “Parents should not be emotional about giving away all the money to children, as they have their whole life ahead of them. As parents, you don’t have that luxury. Even banks don’t lend to senior citizens very easily. You should invest the wedding surplus well and look at living a hassle-free retired life,” said Melvin Joseph, founder, Finvin Financial Planners, and a Sebi-registered financial adviser.
If parents have retirement fund in place and wish to gift the surplus money to the child, they can explore avenues that offer some returns. “Ideally parents should ask their children to define their goals and invest accordingly. There is no fixed set of instruments for everybody. The investment avenues vary as per the risk profile and goals of an individual,” added Joseph.
If the couple or parents are unable to decide on their own, approaching a fee-only financial planner could help.
While covid-19 has become a dampener for weddings this year, financial planners believe this will lend some amount of understanding for the long term as to why spending lakhs and crores on weddings may do no good if one is not prepared for emergencies and important goals such as retirement.