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How To Pay For A Wedding
I understand the value of a dollar extremely well. Each day
I break the world around me down into dollars and cents. I
try to assign a value to the meals I eat, the clothing I
buy, and the services I pay for. If I can’t justify my
purchase, I won’t make it based on principal. Because I’m
in my mid 20’s, there are plenty of expenses which I
haven’t covered yet. College tuition would be a good
example. Clearly this is a good thing because shelling out
for education expenses is hardly what I feel like doing
right now. The big-ticket purchase which I’m curious about
today is weddings. I’ve been to plenty and have a pretty
good idea about what the financial breakdown looks like,
but I still have to wonder, why does it need to be so
expensive?
Studies show that the average wedding in 2006 cost $26,802.
In the breakdown, the reception usually eats up about half
the money, while photography, ceremony, flowers, and
outfits consume most of the rest. Engagement parties and
the ring are a separate issue I guess. As a New Yorker, I
have to assume the higher end of the spectrum, perhaps
around $40,000 for wedding that accommodates about 100
people which isn’t particularly flashy or overdone.
My instincts tell me that the age of the bride and groom
probably factor strongly into both the cost of the wedding
and how it gets divided. I would think that 25 year-old
couples generally spend less money on weddings than 35-year
old couples, presumably because they have less money.
However, this may not be the case if we’re discussing a
traditional wedding in which the bride’s parents are
footing the bill. Then it wouldn’t matter how old the
marrying couple is, only how much money the bride’s parents
have. I would think older couples (35+) getting married
either pay for the wedding on their own or merely seek out
parents for a contribution. If the groom’s family has
substantially more money than the bride’s family, why not
ditch tradition and be practical? Also, if one guest has a
larger family than the other, wouldn’t it make sense to
account for that in a discussion about cost.
So how do we pay for the wedding? Ramit Sethi, another
financial blogger, suggests saving in advance for your
wedding based on the average ages in which we tend to get
married. In the United States, women tend to tie the knot
around 26, and men around 27. If we start putting even
$300/month into an interest-bearing account at age 21, it
could cover the majority of your expenses. The earlier you
start saving, the lower the monthly amount needs to be.
While this idea sounds practical and would be extremely
responsible, I find it highly unlikely that people will
save for a wedding before they are engaged. C’mon, you
could be saving forever :-)
Another idea I’ve heard is financing a wedding. You could
take out a loan from the bank, or *cringe* take some equity
out of your home to pay for it. This is very troubling for
me to hear as a financial planner. For either couple
(newlyweds or parents) risking your retirement security or
even delaying it to pay for the wedding sounds like a
disaster waiting to happen. There are too many other life
events which require large sums of money. Buying a home and
paying for children’s college costs would be two examples.
Regardless of how important your wedding day may be, it
shouldn’t take jeopardizing your own financial security to
mark its significance. I would say in most circumstances
financing a wedding is a bad decision.
I think what it comes down to is that every family has
different finances and different views about what a wedding
should cost. The two families should have an open
discussion about wedding costs and any other issues that
may come up. Perhaps the bride’s family, the groom’s family
and the bride and groom, split the cost. This would spread
out those expenses in plenty of directions. I would also
assume the guest list ties into the payment issue. If one
side invites only 20% of the guests, perhaps they make a
smaller contribution to the reception. You may as well get
all of these issues out in the open. Most importantly,
consider that your future is with this one person. If that
registers well with both of you, the financial issues
should ultimately take second fiddle.
As for suggestions on how to throw a fabulous wedding for
not-so-much money… unfortunately I’m not there yet. But
please share your ideas and experiences.
Russell Bailyn
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Wealth Manager
Premier Financial Advisors
14 E. 60th St. 402
New York, NY 10022
(212)752-4343 *31
rbailyn@premieradvisors.net
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