Wedding rings [Illustrative].
(photo credit: ING IMAGE/ASAP)
Over the last two weeks I met with a few couples who had recently received decent-sized inheritances.
After we discussed their monthly cash flow needs I started asking them about their short, mid and long-term goals. As if on cue they both answered that the most important goal they have is marrying off their children and helping them buy apartments. Interestingly, making sure they had enough money for retirement came in a distant second.
Start Planning As a financial adviser, I have found that a significant amount of all my meetings are related to help financially plan for weddings. Some parents already have a decent amount of money that they have saved, inherited or invested from their own weddings, and they are planning ahead to marry off their children without having to borrow money.
But the average couple only starts thinking about weddings when their children get out of high school. A few months ago I was sitting with a couple and reviewing their finances to plan ahead for weddings. Their oldest child was a 16-yearold boy so they had some time until there would be a wedding, but they wanted to create a modest plan so that in five-to-seven years they would be able to help out their son.
After the meeting was over I started getting really nervous, something that doesn’t happen often. I immediately called my wife and said to her: “After making a bar and bat mitzva in the span of eight months, we thought we could take a breather because the next celebration we would celebrate would be another bar mitzva in about five years. But we have a daughter who is almost 16 and we could be making a wedding before the bar mitzva and we have to start planning ASAP!” That was a big wake up call for us.
As I can attest, we don’t always think so far ahead when it comes to planning for life-cycle events, but we need to.
It becomes vital to save as much as possible, and as soon as we can. A realistic plan to marry off our children should be formulated, minimizing the amount of possible debt. Those who are just scraping by on a month-to-month basis and have no real savings should contact organizations like Mesila or Pa’amonim for help in creating a realistic plan of how much to contribute toward the young couple and if it is realistic.
How to plan One typical example is a couple with four children, who have about $120,000 in the bank. The oldest child is a 16-yearold boy, followed by girls aged 15, 11 and a nine-year-old boy.
The couple reckons that both the oldest boy and girl will get married in around six-to-seven years. For the younger two kids there is plenty of time. The first step the parents need to do is to try and figure out how much money they would like to give to each child; the same amount to each or a more flexible amount depending on need. Keep in mind that the younger children will potentially get a lot more than their older siblings as they have more than a decade for their money to grow. Because of the longer-term investment horizon for the younger children they can actually allocate more to the older children because of the potential portfolio growth that I mentioned. That mean instead of giving each one quarter of the amount they can give closer to 35-40% to the older kids.
Professional Advice It is very important to work with a professional who can assess your situation and make sure that your investment strategy will help you reach your goal. The importance of investing wisely, in this particular case, cannot be stressed enough, because if you either delay or don’t properly allocate your funds, then you will either have less money than planned or need to take on a debt to marry off your children.
Marrying off your children is a blessing, and if you take the proper steps now your blessing doesn’t have to lead to economic collapse.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.Aaron Katsman is author of the book ‘Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill)’, and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.gpsinvestor.com or email email@example.com.