BackMaking a birthday fun(d)
GOING ALL OUT? Customised cakes, theme parties, special costumes, return gifts – when you plan for your child’s special day, remember to fix a budget, plan ahead
PremiumMUMBAI : When it comes to birthday parties for their children, some parents like to go all out. One such parent who likes to splurge for his child is New Delhi-based Renu Arora, 50, who works as a teacher at Kendriya Vidyalaya. Her 13-year-old daughter Paawni likes to have theme parties on her birthday in September. In 2016, Paawni had a princess-themed party.
“There are too many elements in her party and the total birthday expenditure touches ₹30,000 almost every year. I spend around ₹5,000 on her birthday dresses — one for celebrations at school and another for the main party. Expenditure on booking a hall, decor and food go up to ₹16,000, assuming at least 15 to 20 children will be invited," said Arora. Then there are chocolates that Paawni distributes in school, which are limited to a certain amount by the school administration.
“For return gifts, if you spend even ₹100 per child, you end up shelling ₹1,500 to ₹2,000," said Arora.
However, she does not feel the need for creating a separate birthday fund. “We keep aside at least 20% of our total household income in an account, which we use for any contingencies or such one-time expenditures. In September, when the expenditure is actually outlaid, we may have to stall our investments or postpone it for a month. But we do not feel the money crunch because both, my husband and I, are working professionals and the running income of the house suffices," said Arora.
How you plan for the birthday depends on your income. “If there are two earning members in the family and the household receives around ₹1.7 lakh to ₹2 lakh a month, funding a birthday party (which costs ₹30,000 on an average) should not be an issue. I they are not able to do it they should run a check on their expenditure plan," said Suresh Sadagopan, founder, Ladder7 Financial Advisories.
Unlike Arora, Mumbaibased Mansi Sheth, 34, a housewife, creates a corpus for her eight-year-old son Yug’s birthday, three months prior to the birthday date.
“Yug’s birthday comes towards the end of the month in February and we feel a crunch around that time. Hence, I start saving for it from November," said Sheth. “We save 2%-3% of our monthly household, and total expenses come to ₹10,000-15,000."
Sheth says she parks the money in her bank account. “We spend ₹2,000 -3,000 on the themed cake. The next big expenditure is on return gifts, which is around ₹3,000 - ₹4, 000. The mothers in our residential society have set ₹250 as the maximum amount we can spend on birthday gifts for each other’s children."
HOW SHOULD YOU PLAN FOR IT? The most important task is to fix a budget and determine where you ill fund it from. Apart from keeping the money in a liquid form, you could also start a one-year systematic investment plan (SIP). “You can use the SIP money at the end for your child’s birthday," aid Sadagopan. However, there is another way to fund such events.
“Sometimes your intended corpus may be more than you need because of the interest you earned from it. Say you invested ₹5 lakh in a liquid fund for a year intended for emergencies and you earned ₹30,000 as interest. You could use that interest amount for such events," said Lovaii Navlakhi, founder, International money Matters Pvt Ltd. This way you keep your emergency fund intact, while at the same time ensuring that your child does not miss out on the fun.
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