Smart Financial Planning for Life's Major Milestones: Navigating Education and Marriage Costs

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You may be employed at this point in your lives, or some of you may have chosen to pursue post graduation. So far, if you are enjoying being part of the Mool family and have been following our money guide series consistently, then we assume that all of you have health insurance by now; if not, get one right away. All of you have set aside three to six months' worth of expenses as an emergency fund in order to cover unforeseen events.

By now the chances are high that you often get asked, “When are you planning to get married?” Most of you might end up responding “sometime in the future!” or “when it's appropriate for us!” or “we’ll let you know,” with a big smile and exaggerated cheerfulness. But have you ever thought about when it will be the right time in future that we are referring to? When will it be appropriate for us?

According to a study, the average age of matchmaking has gone up by 2 years in the past decade. The average age of signing up on Shadi.com increased from 26.8 years in 2012 to 28.8 years in 2022. This doesn't mean that you have to drastically alter your time frame if your own wedding plans don't line up with that particular bracket.

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Marriage plans are generally deferred due to some common reasons like either you have plans to pursue post graduation before marriage or you are not financially ready to sponsor your wedding followed by family responsibilities that come along with it and honeymoon etc.

Don't you think, for all the reasons listed above. You would need money to achieve any of these goals, whether it's to pursue post-graduation education or cover wedding costs. You are not only bound to pay for the tuition fee of college or cover for the cost of your marriage. There will be major add on costs that comes along in either case. 

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Post graduation cost 

Consumer price inflation (CPI) has been around 6% in the last 3 years; the rate of inflation in education has been significantly higher, at around 11-12 %. This is a possible indicator that education costs could double every six to seven years.

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India's premier business school, IIM-Ahmedabad (IIM-A), has raised its fees from INR 4 lakh in 2007 to INR 27 lakh presently. This marks a 575% increase over the last 15 years. MBA fees from a Tier 1 or Tier 2 college in India for the full-time programme ranges from INR 12 lakh to INR 40 lakh. If your college doesn’t have hostel facilities  then you might need to look for an accommodation yourself. Tuition is only the tip of the iceberg. Added costs associated with room and board, course materials, parking and transportation can nearly double the cost to attend many colleges. 

Costs associated with marriage 

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Did you know? 

As they say, "Marriages are made in heaven." But the costs must be covered here on Earth. A middle class Indian wedding could cost between 20 lakhs to 5 crores. A person in India is estimated to spend one-fifth of the total wealth accumulated in his lifetime on his wedding. The other costs associated with marriage includes apparel, gifts, wedding cards, photography and jewellery etc.

A wedding can be very costly, and a considerable portion of the total cost is often attributed to the honeymoon. Couples don't think twice to spend lavishly to make the occasion unforgettable because it's a "once-in-a-lifetime" opportunity. A three-night honeymoon within the nation may cost as much as Rs 1.25 lakhs on average, while a honeymoon abroad will likely cost roughly Rs 3.5 lakhs. It also depends on when you travel; if you go during the busiest holiday season, your expenses may go up significantly.

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It's important to reflect upon the point that from where will the funds come from? 

“The time to repair the roof is when the sun is shining.” Cutting the costs and investing systematically provides two prime benefits. Firstly it will reduce the corpus amount required to be accumulated and secondly a small amount of the investments, benefits from power of compounding, can amass a sizable corpus after a few years of time. 

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Saving the post graduation cost

• Scholarships and financial aid schemes of colleges/universities are the most well-defined methods to make your education affordable, even at a premier institution. It can save upto 50% of the tuition fees. 

• If you must find a place to stay on your own, consider looking for affordable housing  accommodations like hostels and shared apartments.

• You can always look for renting the books instead of buying them. Nowadays you also have an option of getting E-books. Make sure you are getting the latest edition. This way you can save upto 50 to 80% of the costs associated with purchasing new books. However, it is recommended to purchase essential books that you will need throughout your academic years and even later in your career. 

• Lastly, don’t forget to take the tax benefits u/s 80E for the interest paid on the education loan if applicable. There’s no cap on the amount of interest eligible for exemption.

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Saving the marriage cost

• Food is one area where you can save a lot. Avoid serving too many international items, as these increase the cost per plate. On average, hotels and banquets charge Rs 1,200 per plate for including international cuisine, whereas Indian cuisine costs only Rs 800 for each guest.

• Wedding attire, which is a one-time purchase but can be highly costly, represents another significant expense. Some designers currently provide wedding dress buyback programs. Another cost-effective fashion trend is picking a design and having the clothing tailored locally. More people are becoming open to the idea of renting wedding clothes which can result in savings of up to 60–70%. The starting rental price is approximately Rs 2,500.

• Come up with ideas for creating personalized e-invites, or set up a wedding website or video that your guests can access. This way, you will save on the costs of printing and dispatching wedding cards.

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Starting the investment journey

Before making any investment, it’s important to define your goals. How much money will be needed and in how much time? Remember, you might be taking the present cost of expenses, which needs to be inflated to know the future value of current expenses. Inflation rate for education may or may not be different from the inflation rate of marriage expenses and traveling.

If you are in your early 20s then most of you will tie the knot within the next 5 to 8 years. If you have been working for a while and intend to get married soon, consider using some, if not all, of your savings to pay for your own wedding rather than relying solely on your parents' funds or taking out an expensive personal loan

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You know what Mool Chacha says? “Take SIPs not TIPs”

If one's goal is to get married within five years, they should consider a systematic investment plan (SIP) in balanced funds. If the goal is to marry after five years, they might consider more aggressive options like mid-cap or blue-chip equity funds." Before making any investment, ensure to evaluate your risk profile. Click below to take a comprehensive risk assessment provided by Mool to help you get started.

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Key Takeaway

• Make a suitable college list, pick a likely course, and estimate the fees and living expenses. Doing this will help you estimate how much you’ll require to save for higher studies.If you are looking at foreign colleges, investing in funds that give you exposure to that currency can be a good strategy. This way, you’ll be able to address the forex risk.
  

• Prior to choosing to manage a family, financial management is crucial. Marriage is not solely about throwing extravagant parties. It all comes down to making the initial move toward accepting a new duty. It's about realizing that you have to schedule your future to coincide with your partner's preferences. Thus, preparing ahead of time for marriage is beneficial.
  

• Decide on the budget you have for the celebration and ceremony. Determine possible celebration locations and expenses. Planning your investments early will help not only accumulate enough for marriage but also for expenses, thereafter.
  

• Find out how much you want to spend on your honeymoon. Decide how long you want to spend on the trip. Consider all of the trip's costs, including lodging, food, and transportation.