What is the child’s marriage planning?

Planning for children’s marriage starts when the children are young. You must save and invest as early as possible to give the money the time to grow into a large corpus. You must choose an investment that offers return above inflation over the long term.

Invest in equity or fixed income securities as per your risk profile to accumulate the corpus at the time of the financial goal. You get the benefit of the power of compounding or return on returns, where a small investment grows into a large sum of money over some time.

You must plan the investment depending on the time horizon and risk tolerance. If you are a conservative investor, you can invest in fixed income securities that offer return above inflation over some time. The aggressive investor can choose equity investments that provide higher returns for a higher risk. You may invest in equity investments with a time horizon of at least five to seven years, to achieve the financial goal of children’s marriage.

What is a child’s marriage planning calculator?

The child’s marriage planning calculator is a utility tool to calculate the marriage cost of your child’s dream wedding. The child’s marriage planning calculator will show you the wedding cost, depending on the age of the child at marriage. You get an idea of the future expenses for the child’s marriage. It helps you to accumulate a corpus for the financial goal by investing when the child is young.

The child’s marriage planning calculator has a formula box where you enter the current marriage expenses of the child. You must also fill the expected rate of inflation (assume an inflation rate of 5%-6% a year), the current age of the child, and also the age of the child at marriage.

The child’s marriage planning calculator will show you the future cost of the marriage, at the time of the child’s wedding. If you have already invested some money for your child’s marriage, you can fill up the figure. You must also fill up the expected return on the investment. The child’s marriage planning calculator will show you the amount you must invest per month, to accumulate the requisite corpus for the child’s marriage.

How does the child’s marriage planning calculator work?

The child’s marriage planning calculator uses the concept of future value to calculate the accumulated corpus at the child’s age of marriage. You may use the formula:

FV = PV (1+R)^N

FV = Future Value
PV = Present Value
R = Rate of return on the investment
N = Duration or time-frame of the investment.

For example, the current age of the child is five years. The age of marriage is 18 years. You estimate the current wedding expenses to be Rs 10 lakh. Assume an inflation rate of 6%. The child’s marriage planning calculator will calculate the future cost of marriage as:

PV = 10 lakh
R = Inflation rate of 6%
N = Child’s age at marriage – present age of the child = (18-5) = 13 years.

FV = 10,00,000 (1+0.06)^13 = Rs 21,32,928.

You require Rs 21,32,928 at the child’s marriage if the current wedding cost is Rs 10 lakh.

Now, let’s calculate the investment required per month to meet the child’s cost of marriage. You have currently not saved any money for your child’s wedding. Let’s consider the expected return on the investment at 8%.

Use the PMT Function in the Excel Calculator where you enter the rate = 8/100/12. (Convert into the monthly rate).

You must calculate the period of investment in months = 13 *12 = 156 months.

Put Pv = 0 and FV as per the earlier calculation = Rs 21,32,928.

The child marriage calculator shows you the investment required per month for the child’s marriage as Rs 7,815.

How to use the ClearTax Child’s Marriage Planning Calculator?

The ClearTax Child’s Marriage Planning Calculator is a handy easy to use the tool to calculate the child’s marriage costs.

• You must first enter the current marriage cost.
• You then fill up the expected inflation rate.
• Enter in the current age of the child and also the child’s age at the time of marriage.
• The ClearTax Child’s Marriage Planning Calculator will show you the future cost of the child’s marriage.
• If you have already invested some money for the child’s marriage, you must fill up the amount.
• You then fill the expected rate of return on this investment.
• The ClearTax Child’s Marriage Planning Calculator will show you the investment required per month to meet your child’s marriage expenses.

Benefits of using the ClearTax Child’s Marriage Planning Calculator

• The ClearTax Child’s Marriage Planning Calculator shows you the amount required for the child’s marriage, right now. It helps you to accumulate the corpus, based on your time horizon and risk profile.
• If you know the future marriage costs, you can plan a memorable wedding for your child.
• You can invest small amounts regularly through the SIP of a mutual fund, and accumulate the corpus for the child’s marriage. You must invest in equity only if it matches your risk profile.
• The ClearTax Child’s Marriage Planning Calculator helps you to choose the best financial instruments to achieve your financial goal.

Why Should You Plan Your Child’s Marriage?

1. Planning helps you to handle the sudden expenses associated with the child’s marriage.
2. Timely investments help counter the impact of rising inflation rates.
3. You will not have to disturb your retirement fund or even the money set aside for children’s education.
4. Building a steady corpus by setting aside a small amount each month relieves financial stress.

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