Here’s how you can finance the dream birthday party for your child

Gone are the days when birthday parties for children needed little preparation. A festival of balloons, a labyrinth of colourful streamers adorning the venue, and a no-hassle menu for the invitees – parents did not have to spend significant time and energy hosting birthday parties for their children.However, times have changed. Lavish birthday parties for children have become an aspiration for many families. Be it theme-based parties or a grand celebration with a large guest list, parents do not shy away from orchestrating an extravaganza for their children. From homebound celebrations just involving the closest friends and family, the regular birthday cake, and a few home-cooked delicacies, children’s birthdays have now moved to high-end venues where guests are treated to a host of luxurious experiences.Unsurprisingly, such celebrations are also not easy on the pocket. Sunidhi Kataria, an event planner based in Kolkata narrates, “The average budget for such parties can range between ₹35,000 to a few lakhs depending on the scale of the celebration. With time, the themes for birthday parties have evolved significantly and parents leave no stone unturned to raise the bar higher. It is common for parents to outdo their peers and spend more to make the event memorable.”With children’s birthday parties becoming a status symbol, it makes sense to dedicate a little extra attention to the financial preparation required for such parties. Kataria says, “My firm organizes 30-35 birthday parties in a month and often I see enthusiastic parents who want to go all out for their children’s parties and when the planning process starts, they realise they do not have enough liquid resources at their disposal.”Raina Bannerjee, an academician based in Kolkata concurs with Kataria. “I have two children aged 4 and 7. My husband and I have learnt over the years that simply swiping your card when you start preparations for the party, especially if it is going to entail a lot of pomp and show can put you in a tight spot financially after the party is done. Now, we start planning at least a few months in advance – we draft a budget and depending on how we want the party to be, establish a separate fund for that.”Banerjee opines kickstarting preparations in advance can also help you spread out your expenses over months. “If your child’s birthday is 2-3 months away and if at present, you have some funds to spare, you can buy the return gifts or some other non-perishable items. This way you will not be burdened with a mountain of expenses in a particular month. It is important to remember that if a grand celebration is on the cards, you would have to factor in extra expenses because you will have to spend money on yourself and the other members of the family for purchasing outfits, etc,” Banerjee explains.Executing a distinct financial plan for your children’s birthday parties may seem like an added burden. A smart way to approach this is to keep it as simple as possible, Banerjee says, “Existing financial goals such as children’s education, retirement, home renovation, etc may make it hard to dedicate thought and action to investing separately for this. The trick is to avoid any kind of elaborate strategy and choose very limited investment avenues. For instance, my husband and I have been primarily relying on liquid funds for these expenses – they carry low risks and the returns are sufficient for the goal in this case.Preeti Zende, a SEBI Registered Investment advisor, and the founder of Apana Dhan Financial services says, “Selection of financial products depends on the timeline of your goal. If your kid’s birthday is around the corner or it has less than 6 months then you can keep aside money in a separate savings account. If you have one year then a simple bank recurring deposit (RD) is helpful. If you want to plan a big birthday once every 3 years then a combination of bank RD, liquid funds, and arbitrage funds are good options. And if your timeline is longer than that, you can add one hybrid fund to tap into the potential of equities.” While investing diligently to have the birthday party of your dreams can save you from a financial headache, it is important to not let yourself get too carried away by peer pressure. After all, your child’s birthday is an opportunity for you to create memories with your loved ones that you can cherish all your life – even when your children have grown up. “The idea is to have fun and celebrate another year of your child growing up. How the celebrations happen and whether they are aligned with recent trends should always be a secondary thought!” quips Banerjee.Action pointsYour child’s birthday party can be a great time to show off your creativity and improvisation skills and also save a few thousand bucks. For example, DIY craft items can be used for the party décor, you can forego hiring a DJ and create your playlist, send e-invites designed through free online templates and you can use ideas for party games from the internet.Inviting 500 people for the first birthday of your child makes little sense because the child would not have the cognitive abilities to acknowledge the celebrations and in all likelihood may only end up feeling perturbed with so many people around. Age-appropriate parties can not only help you save a lot of money but they would make the celebrations more meaningful for the family.This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.