This is Part 5 of a continuing 12-part series on financial planning. Adam and Aida have been going out for quite a while now. They are doing pretty well career wise and are contemplating moving into the next stage of their lives – as husband and wife. Read on to see how they work out their finances prudently together.
Adam walked past a jewellery shop when he stopped to look at the diamond ring he has been eyeing for the past few weeks. He felt it was about time for them to settle down though he realised that the wedding expenses can be pretty substantial. The ring was on sale with an irresistible gift accompanying it – a candlelight dinner voucher for two. He decided to charge it into his credit card as he was confident his performance bonus, which was due within a month, will come in before his credit card payment is due. “Charge it!” he exclaimed. The damage was done – RM4000 and that was after a good discount!
Adam was aware of the responsibility that comes with owning a credit card and he has been very disciplined by paying off his credit card bills in full every month. As a rule of thumb, we should never swipe the card if we cannot pay for it in cash, or else, be prepared for penalties and finance charges of more than 18% p.a. As an alternative, we can use debit card for the convenience of cashless purchases whereby the amount spent will be immediately deducted directly from your bank account. You would only be spending up to your own savings amount.
Adam planned to surprise Aida, so on the pretext of celebrating his promotion, he invited Aida out for a candlelight dinner. As they were about to finish their dinner, Adam blushingly proposed to Aida on bended knees, with the symbolic diamond ring and a bouquet of roses in hand. She accepted immediately!
If we think that owning a car is a big commitment, marriage is an even bigger commitment and should be entered into only if you are capable of handling the responsibilities that come with it. With the romance comes the real issues, including managing finances mutually and harmoniously.
Be realistic about your wedding plans based on your budget and do not try to live up to the expectations of other people, including that of your prospective spouse. Prepare a wedding budget aligned to your needs and wants – most importantly, discuss with your spouse-to-be how much money both of you can comfortably afford. Though it may be a once in a lifetime auspicious event, but it may end up taking up a lifetime to pay off all your wedding debts.
Adam and Aida discussed their expectations of the wedding ceremony and worked out their wedding budget:
|
No
|
Items
|
Budget
|
Actual
|
|
1
|
Wedding Dinner (500 guests@ RM60)
|
30,000
|
|
|
2
|
Wedding Rings
|
6,000
|
|
|
3
|
Wedding Photos
|
3,000
|
|
|
4
|
Wedding Gown & Suit
|
4,000
|
|
|
5
|
Gifts
|
3,000
|
|
|
6
|
Honeymoon (Within Asia)
|
4,000
|
|
|
8
|
Other “surprises”
|
5,000
|
|
|
Total
|
55,000
|
|
|
They believe that gifts from their guests (normally in the form of cash) would be able to cover a major portion of the dinner costs. As a contingency, Adam also accounted 10% under “Other surprises” to cater for any other incidental and unforeseen expenses like costume jewellery, facial, hairdo, etc. commonly applicable to weddings.
As much as we hate to admit it, money will somehow affect our relationship with each other. For couples intending to tie the knot, it is best to have a firm standing on our expectations of the wedding plan. Otherwise, you may end up getting entangled with money issues which may eventually strangle the love you have for each other.
