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Preparation for Children’s Wedding Fund
As a result of the research conducted by <Korea Consumer Agency> for one year beginning 2003, the wedding expenses per couple in Korea reach 90 million won on the average. On the other hand, according to the Korea Marriage Culture Research Institute annexed to marriage information company Sunwoo Corporation, the wedding expenses of newly wedded couples in 2003 in 5 major cities reached 134.98 million won; this is about twice the average of 78.45 million won recorded in year 2000. Since wedding is a great burden for you in the future, don’t you think you should plan and prepare for it?
What points should you consider when preparing for your children’s wedding?
No matter how hard you try for your children, you cannot provide the solution to everything. Thus, why don’t you stop for a while and think of the following:
Have a flexible mind when it comes to weddings.
The wedding expense depends on the following: house preparation, honeymoon, well-wishers’ reception, and money for the parents-in-law. Still, most parents want to spend much more than what is generally required. As shown in the abovementioned survey, the wedding expenses of more than 60% of newly wedded couples are shouldered by their parents. As the marriage progresses, the relations of the families of the husband and wife are deemed most important; considering all things, money is spent on unpredictable costs that are not included in the budget. As a result of a survey, 42% of newly wedded couples cited money for parents-in-law; 30% of them chose the wedding ceremony, suggesting that the superficial formalities and vanity go to extremes. You need not be told that you should prepare only the essential things for your children.
Prepare in advance.
As the savings and investment period lengthens, the reserve also expands, thanks to the compound interest. According to the Korea Marriage Culture Research Institute, for newly wedded couples in 5 major cities in 2003, the average wedding expenses of the bridegroom reached 95 million won; those of the bride reached 40 million won. If your family is rich, consider putting away a certain amount of assets for your child. If you put away 15 million won -- which is within the tax exemption range -- as soon as your child is born, and if you put away 15 million won within 10 years, your money will increase to as much as 75 million won by the time your child turns 20 given a compound interest of 6% per year.
Use a proper savings and investment method.
When you decide on savings or investment, you need to consider various factors such as personal limit factor, investment period, tax incentives, and actual earnings ratio based on your financial status. If you can afford a long preparation period, reserve through aggressive savings or investment is possible; you can use growth-mutual fund, long-term bond, personal pension trust, and long-term insurance for savings. In contrast, if your preparation period is short, you can utilize a trust for stability and a short-term bond fund. Some financial companies even prepare a savings product for the wedding fund’s reserve to pay higher interest to clients and to provide incentives including wedding fund loan, travel process service, and travel insurance that can be subscribed to at no charge.
Help your children prepare their wedding by themselves.
You should think about how it will affect your children if they start their marriage with everything they need given to them. From the educational viewpoint, having children share the wedding cost with their parents is more reasonable. If your child has a job, advise him/her to save a considerable amount of money after subscribing to a cumulative product.
In case taking out a loan is unavoidable, choose one with a more advantageous condition.
The wedding fund loan includes a bank loan, a mutual trust loan, and a card loan. No matter how much help you give your children, however, they may shoulder a heavy burden if they start a new life with a loan. Thus, it is better to choose one or two products with low interest and sufficiently long repayment period. For reference, if you have an actual track record with a relevant financial company in the past, borrowing a wedding fund is easier. If the business continues for 3 months or 3 years, you can easily borrow up to 10 or 20 million won.
Don’t use the nest egg you’ve allocated for your retirement.
Don’t withdraw your savings for your spouse’s retirement for use as your child’s wedding fund. Instead, try bringing down the house expense, which accounts for 60% of the wedding expenses. In particular, you can let your child and his/her new spouse live with you until they can get a house of their own. You can also try slashing the incidental expenses for the ceremony and wedding expenses. Otherwise, prepare a fund by taking out a loan and let your child repay it himself/herself.
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