Certain milestones stand out to us in life.
That being said, college expenses have gone up. In some cases, way up.
But the thing about milestones is that they aren’t often cheap. In fact, some of them can be downright expensive. We’re accustomed to the idea of an arm and a leg in exchange for the big things we need: weddings, births, health events, funerals, college funds, mortgages. Our first car and our first child are both milestones, but they’re also far apart on the financial scale. Whereas a new car can cost thousands of dollars, a child can cost hundreds of thousands. Factor in other costs such as college, and your balance sheet keeps going up.
When we see love stories, we can often relate. We experience love and romance and everything that goes with it, sometimes several times in our lives. And what comes next? For many of us, it’s marriage. Sometimes it’s buying a house. Children frequently factor into these discussions. What starts as just a love story soon becomes a financial life and a plan that requires balance and budgets. Of course, not all weddings end in fairy tales. Divorces are a potentially massively expensive milestone. Our plans can be thoroughly derailed before we even have a chance to budget them out.
What gives? Are we just adrift in a financial ocean in our lives, doomed to sail randomly until we’re out of money? If we get married, must we be poor from then on?
Well, no.
Despite the uncertainty of life and the pressure of milestones, we can actually budget and plan better than we’ve often been led to believe. We don’t have to go broke when we get married. We don’t have to only eat ramen and soup after we buy a house and get a mortgage. We don’t need to watch our bank accounts empty when we have health events, or when we plan funerals or college funds for our kids. We can plan, prepare, and budget smartly. We can fund the things we want.
Let’s discuss the a big one: weddings.
Never mind the rings. The event itself is where the real money is spent. The average cost of a wedding in Nebraska in 2019 was $23,000. That’s the cost of a new car, a down payment on a home, or a first year in college. Factored into that are catering, venues, photographers, gowns and suits, transportation, hotels, and miscellaneous decorating and preparation costs. Weddings frequently are more expensive than $23,000, such as the national average, which was $33,900 in 2019. Sometimes weddings spiral out of financial control until long-term debt is all but assured for the newly married couple.
Sort of kills the romance, I know. But you want your special day to be, well, special. You want to celebrate with friends, family, and guests. You want it to be memorable and happy. That costs money. Being a milestone, it’s something you’ll look back on for years to come if it’s done right.
Part of doing it right is financing. As much as we might dream of the whole wedding being paid for by family, parents, or friends, that often isn’t realistic. Sometimes we need help from another source. Wedding loans, for example, are unsecured personal loans from a bank, credit union, or online lender. The loan is used to pay for anything related to the wedding. It’s paid back in monthly installments that usually accrue interest. There are distinct pros and cons to funding a wedding this way.
Pros:
- Fast
- Can build credit with it
- Fixed interest rates
You can secure a wedding loan relatively quickly, depending on the institution. Since lenders report payments to the major credit bureaus, you can build your credit by paying back the loan. This can help later if you decide to buy a home and need a good credit score to secure a mortgage. As a wedding loan is a fixed interest loan, you make the same payment each month. Easier to remember that way.
Despite this, there are also a few cons:
- You might not get approved for one, depending on your credit
- Long terms
There’s never a guarantee you’ll get approved for any loan, let alone for a wedding. You have to have good credit to get good terms, and you have to be aware of your financial past in relation to your financial future to make it work. A personal loan means you can be repaying up to seven years later. For a young couple on the road to their financial independence, this can be a drag.
There are a few steps to take before applying for a wedding loan:
- Check your credit reports
- Decide how much you need to borrow
- Compare offers between lenders by pre-qualifying
Taking the time to compare lending rates and APR is a good place to start before getting any loan. Reviewing your credit report helps you see what you’d be able to get, and how you’ll be expected to pay it back. Adding a co-signer can help your chances of getting the loan approved, and getting it paid back. Many couples don’t like to think about the financials of wedding planning, but it doesn’t have to kill the romance to discuss financials realistically. For a marriage, ideally, this is good practice.
If a loan isn’t going to be for you, another option is to pay for it yourself using credit. Putting an entire wedding and its associated costs on a card or cards is potentially quite risky. You’re on the hook for what you’ve bought. Your credit limit might not even fund the entire thing, even if you split it with your future spouse. But you can still make smaller purchases that help take chunks out of the total.
You can apply for a card with a low APR, especially for the first year. This will help you repay the debt. You can use your existing credit card to pay for it. If you have travel rewards on your cards, this becomes more valuable. You can make purchases, pay them off, earn travel points, and cash those in during the honeymoon. Flights, hotels, you name it. Many couples find they can have a smaller wedding provided the honeymoon is ideal. If that’s your angle, then credit is a realistic choice, if you can cover it.
But, as we’ve mentioned, paying for a wedding with credit has serious risks. You could potentially be paying off the card and its expenses for many years to come. As a rule, you should only buy what you can afford, and that includes credit card expenses. Even if you can’t pay for it now, you should be able to make a budget and a plan with a definitive time horizon for when it will be paid off. You should be able to set timeframes and goals for your pay off periods, and you should hold to it. If you can’t do that, you may likely miss payments and accrue unnecessary interest. You may also injure your credit score. This can hinder your ability to get a loan for a home or other needed expenses.
One thing to consider is scaling back.
We don’t have to let our wedding suffer because of the finances. We don’t need to settle for okay if we want amazing. The most important thing about weddings is the couple. It’s about celebrating love, commitment, and the future together. Scaling back the pageantry doesn’t hurt anything if the vital traditions remain intact. And there are a number of tips to help reduce the costs of a wedding:
- Invite fewer guests
- Have a midday wedding instead of a nighttime one
- Pick an off-peak date
- Book a nontraditional venue
- Find a cheaper dress online
- Borrow accessories, such as heirlooms
- Simplify drink options
- Ask for money as gifts instead of items
The biggest thing here is to be creative. Your guests don’t have to suffer through terrible food and drinks because you want to save money. You can find a good bartender for less if they’re looking for exposure for a business or a venue advertisement. You can do the same for food, or scale back by having less guests and thus less mouths to feed. Many couples find they’re unable to spend time or talk with all their guests if there are too many. Making the wedding more intimate in size can help crystallize this memory as a great event and milestone in your lives.
As a rule, you should always look around before settling on a first price, especially for venues. Weddings have an infamous (but controversial) financial markup. One estimate said 28% of vendors raise their prices for a wedding. Something that might cost $1 for a birthday or anniversary can suddenly cost $2 or $3 when the word “wedding” is invoked, sometimes referred to as a “wedding tax”. There might also be built-in gratuities. It’s important to read the fine print, ask questions, and negotiate before you sign anything. But, also know that vendors put in a lot of work for a wedding, often more than for an anniversary or birthday. Don’t be chintzy with those who do great work.
Of course, if you’re lucky enough to be in a place in your life where your personal wealth can pay for a wedding, and you’d like to fund it this way, then by all means go for it. If you want to raise the money between you and your future spouse and your extended family’s donations, then you have your route. But even if you’re financing a wedding this way, if never hurts to scale back, check rates, ask questions, and try to make the wedding emotionally special. Just because you have the money doesn’t mean you should ever waste it.
While weddings are a special and lovely occasion, they require planning and work to get right. It shouldn’t kill the romance to budget. Your financial decisions now can affect your financial decisions later, especially as a couple. You’ll be glad you took the time to make good financial choices when it comes time to make the next big one.
