Should we invest for our children’s marriage — or not?

Last Updated on June 13, 2021 at 10:41 am

Alok asks, “dear pattu, sir, thanks to your articles, we have started investing with confidence for retirement and my son’s education (he just turned two). There is one aspect we are not able to decide on. Should we invest for our son’s marriage expenses or not? My wife says no, but I am not sure. Can you please write an article on this topic?”

This is a subject that gets extreme reactions from readers. In this article, I discuss why we must at least think of our children’s marriage expenses as a “planned emergency” if not a financial goal.

Many obsessively plan for weddings in terms of gold accumulation and expenses mainly due to community pressure – more for girls than boys. At the same time, many young Indians are adamant that they will not spend anything for their kid’s marriage and that the kids they will have to fund it themselves.  The only caveat is that many voices in this group are either unmarried or non-parents or new parents.

Now, let us be clear about what we are addressing. This is not a debate about planning for education vs planning for marriage. It is obvious that the former is a need and the latter at least to some extent optional. This is also not a debate about planning for retirement vs planning for marriage.

The first priority is always retirement. What this means is, if you only have limited money to invest (like pretty much everyone!), then retirement is the 1st priority and children’s education the 2nd priority.

We shall only discuss this question: If we have some extra money to spend (if not now, in future), should we consider their future marriage expenses as a 3rd priority or not? Let us focus on those who vehemently believe that they will not fund their kid’s marriage.

A big mistake in (personal) finance is to be certain of future cash in and outflows. It is dangerous to assume “I will not spend for something in future” and end up spending for it even partially due to “circumstances”.

The simple truth, we may say we will not spend today on our kid’s marriage, but we can never certain of that. We may not spend 100% of the marriage expenses but considering the double-digit inflation for this kind of services, even 20% of unplanned expenditure would leave a noticeable dent in our net worth.

Forget about what we feel about funding our kid’s marriage. The most important question we need to ask is if we make a big-ticket expense in future for which we did not plan (when could have), which of our goals would get affected? Retirement. It is always retirement.

If you could never inevst enough and this happens, then that is the way the cookie crumbles and not much could be done about it. I would never like to be found in a position where I have to spend on something for which I could have planned and invested years ago and failed to do so because of inexperience and pig-headedness.

Even if we do think much of investing for our kid’s marriage expenses, it would be better to treat it as a planned emergency and assume some cash outflow for it in future.

Even if we do not sit down and do a proper goal planning exercise for marriage expenses, investing a little more into the funds that we use for their education goal is all that is required.  So I would recommend Mr and Mrs Alok to try and invest 5% or 10% more for their son’s future needs goal. That should help to minimise any nasty surprises!

When I started goal-based investing I invested separately for retirement, my son education and his marriage. Then after my mom needed an attendant I could not invest in all three goals and therefore merged the education and marriage goals. When my in income improved I just invested a bit more for his future needs goal.

In summary, even if you do not wish to inevst for your kid’s marriage if you can spare the cash, invest a bit more to protect your retirement corpus!