Many times when we look at the prospect of planning for a big event such as one’s wedding or an anniversary celebration or even the well deserved holiday, it seems like a daunting task. This is because we see the amount as monumental and aren’t well-equipped with the tools and knowledge to save and budget properly.
It is very important to always begin the process by designing the budget around the resources that are at hand and not with what you wish to have by the time of the event. As any good planners will advise you, the earlier you start preparing, the better.
Step One: Saving
The first step into organising your resources is by saving. All the money put aside towards the event goes a long way into reducing the financial pressure as the day draws near. One of the first hurdles most face when thinking of saving is where they should put their money. Some of the basic, important questions to ask before deciding are; is the saving short-term or long-term, are you willing to take a risk with your money and earn higher interest or would you rather play it safe and earn a lower interest, and finally, how will your savings be affected by your tax position?
Short-term vs. Long-term saving
When you are planning for things like holidays or birthdays, then a short-term saving plan is advisable. In this plan, your money is easily accessible, and you are sure it will be there when you need it. The best types of accounts for this are usually bank and building society savings accounts.
Long-term savings, on the other hand, are for things like weddings and anniversaries. This type of saving depends on how much risk you are willing to take with your money and how safe you want it. You can choose to save your money in a bank, or a building society savings account if you wish to play it safe or invest it in the stock markets if you are willing to take a risk with the hope of earning a higher interest. It should be noted however that investing isn’t just in stocks alone, one can opt to invest in property or even antiques.
At times, even with proper savings, urgent needs may arise that require cash that is slightly out of the budget. In such cases, a personal loan may be taken to turn the tide temporarily. It is quite prudent to have a repayment plan in mind when you take such a loan and to ensure that you can pay it back before taking the loan. Lenders set the interest rates based on your past history and ability to repay debts.
What makes personal loans unique is that you don’t have to offer collateral. When you fail to make a payment, a lender cannot repossess your property but instead will report you to the credit agencies (which has a negative effect on your credit scores) and may sue for payment. However, if properly handled, personal loans are a sure and efficient way of providing financial support towards budgeting for an event.
Step Two: Creating an Outline for the Event’s Expenses
One misstep when budgeting can have disastrous effects. Overlooking an expense often leads to miscalculating the per person cost. This, in turn, leads to underestimating the amount needed and thus creating chaos as the event draws closer. It is, therefore, important for you to ask yourself the right questions while creating an outline for the expenses and cover all the bases right from the beginning to cover the gap between the budget and expectations. If need be, one can also allocate a place in the budget for hiring planners. However, this should be a last resort as it tends to add a burden to the finances.
Step Three: Creating a Basic Event Budget
Going in, you already know that you don’t have an unlimited budget. And once you begin the budgeting process it is imperative to identify areas in which you can cut costs and save money. The goal is not to be cheap and have a shoddy event but to ensure that money is not wasted especially if there are cheaper and better options. It is also recommended to build a buffer zone of 10% to avoid running out of money during the execution stage.