Navigating paying for a wedding can be overwhelming. As of 2019, the average wedding cost in the United States is around $33,900. That number comes just under the average transaction price (ATP) on a new vehicle. Paying for the Wedding at these prices, and with couples already well into their careers and waiting longer to get married, many families are re-evaluating traditions when it comes to which side of the family pays for wedding expenses. And for many couples, the bride and groom are the ones footing the bill. With this in mind, you should think about what kind of wedding you want, how much are you willing to pay, and who will pay for it? Here are four tips to help you budget for a wedding:
- Track your financial health during wedding season and beyond. Make sure you know where you stand financially to get a good sense of what you can afford given your current situation, and to track your spending during the planning process. Personal Capital’s free financial tools can help with this.
- Align your wedding budget with your long-term financial goals. After getting a sense of your full financial picture by aggregating your accounts to Personal Capital’s free dashboard, make sure that what you plan to spend on the wedding will not impact your other goals. Our Retirement Planner can help with this by allowing you to add not only your wedding spending goal, but also other goals like saving for a child’s higher education, taking a vacation, and ultimately, retiring.
- Talk to a financial advisor to ask questions about your financial goals and how a wedding plays into them.
Keep in mind, these are just guidelines; these choices should be in line with what you and your future spouse want as a couple, not just what tradition says.
Important Discussions to Have Around Wedding Finances
In the early stages of planning for a wedding, it’s a good (and financially responsible) idea to discuss expectations with your partner and both of your families. Here are three questions to help you get the conversation started.
- Who can contribute what dollar amount? Does your fiancé’s family have the financial capability and want to contribute more? Or vice versa?
- Do you and your fiancé have money you can contribute?
- Is either family offering to contribute a specific dollar amount instead of pay for specific expenses?
Setting clear expectations of who will pay for what is incredibly important when it comes to the finances of your wedding, especially when you’re weighing your (or your family’s) longer term financial priorities, like saving for retirement or a down payment for your first home. But however you choose to pay for your wedding, make sure it feels right to you and make sure to keep everyone involved informed of what you’re doing and why.
Finances After the Wedding
The average cost of a honeymoon is around $5,300 – and that figure can easily increase with very little effort if you don’t plan ahead and stick to your budget. It’s easy to think that it’s an extra special trip because it’s your honeymoon and allow that to affect your decisions. But it’s important to set expectations around costs, such as hotels, airfare, activities and eating out while traveling. Having a candid conversation about what you can and can’t afford is so much better than having a fight because one of you booked a luxury scuba-diving adventure the other has no interest in. Taking advantage of credit card points – especially if you racked up any while paying for the wedding – is one way to help pay for the honeymoon.
What to Do With Wedding Gifts and Money
After getting married, a natural next step is thinking about buying a home. Most lenders are looking for down payments of 10% or 20% to make a deal. Coming up with the down payment, especially right around your wedding, isn’t exactly easy. That’s where a parental (or grandparental) gift can be a ticket to helping a grown child. While you can be gifted any amount of money at any time, the gift giver must pay taxes on any amount over $14,000. But there are a few ways to receive more than this amount without providing a tax headache for the gift giver. For instance, each one of your parents can give you $14,000, which adds up to $28,000, per year. And because you are married, your spouse can also receive $28,000 per year. At the end of the day, that’s $56,000 to put toward a down payment – a not insignificant amount – that doesn’t require any IRS paperwork. If you do receive substantial monetary gifts for your wedding and are not using it toward a big-ticket purchase like a house, it’s probably a great opportunity to put the gifts toward funding your long-term goals, like retirement.