Financial Planning for Major Events – Part I

We cherish memories of key events in our life like weddings, house warming ceremonies & birthdays. Large amounts of money are spent for the same. Proper budgeting and prudent spending can go a long way in ensuring optimal spending. In this post we address the different aspects to take into account in the lead-up to the function.

Record-keeping - The first thing is to purchase a sturdy notebook (the physical one not electronic!!)This will serve as long-term record of the event.
Budget - It is essential to prepare a budget for the event. The number of guests at a function typically determines the food and venue budgets. Hence, preparing detailed lists of likely guests is essential.
Money management – Once the budget has been finalized, decide on the best method for financing for the same. Try to have a tie-up with friends/relations to arrange for money at short notice if required. This will prevent running around at the last minute to make arrangements for money (borrowing at short notice is often very expensive)
Section Estimates - Estimates need to be made for key areas including food, travel, venue, religious expenses. Leave a generous amount (typically 20%) for miscellaneous items, price escalations. Decide on the upper limits for the key areas, keeping in mind the overall budget. It is surprising how often we go overboard, for a specific item (e.g. clothing) and find ourselves short for the remaining items.
Negotiate key expenses – As a buyer, we have the negotiating power/choice for several items like clothing, wedding contractors etc. It is worthwhile negotiating rates for these key expenses. Often, a token advance helps us secure contracts in advance for major expenses. Doing this earlier also helps us look around for different options, as we have enough time.
Bulk purchases – Purchasing items like clothing, in bulk definitely gives cost savings.
Techno-savvy – The Internet has relevant information in most areas. One can obtain information about the costs of different items; communicate with our distant friends, relations in a cost-effective manner. For e.g. maintaining online wedding albums has become a trend now. For smaller functions, consider usage of personal digital cameras, instead of hiring professional photographers.
Accounting – Note down all relevant expenses, as they occur in the build-up to the occasion. It is surprising, how often expense items get missed out/or they are not considered to be a part of wedding expenses.
Payment Options– Avoid paying cash, unless there are significant cost advantages/no other options. Also do not pay out the entire amount for any vendor. Hold back some amount till the function is completed.
Liquidity management – One needs to have sufficient cash to meet sudden, emergency expenses which come up at the last minute. Apart from that, proper planning will ensure that we do not have to make large cash payments to all vendors at the same time.

Conducting a function is a very personal event, where we decide, how we want to celebrate the event. Hence, the suggestions given above might not be applicable to everyone. Some of us would want to celebrate the event in as grand a manner as possible. Some amount of planning at the early stages saves a lot of pain during the function.