Wedding Financing: Does True Love Have to Break the Bank?

Friday, April 12 at 10:10 AM
Category: Personal Finance

With wedding season quickly approaching, lovebirds are starting to come down from the clouds and think about budgeting for an engagement ring or planning a wedding. Though there has been a slight drop in wedding spending during recent tough economic years, many couples are still breaking the bank in search of the ultimate wedding. The average couple spends $26,989 on their wedding, according to Brides magazine.* Even though that's down from a peak of $28,082 in 2008, nearly one-third of all couples go over budget.

As with any major purchase, the ideal scenario is to save the necessary amount of money before the time to buy comes. It seems simple, but many young people struggle with the reality they need to live within the limits of their income. This may mean waiting to buy until the money is available or saving for things long before you anticipate buying them. Banks and financial planners can help you figure out how much you should be saving each month in order to reach a desired savings goal and can help you account for income tax rates and interest rates that will affect your savings goal.

For parents who will be helping pay for their kids’ weddings, planning ahead is equally important. With the average wedding cost running higher than the average annual cost of attending college, parents should ideally start saving for a wedding before their kids are old enough to date. Set up a separate wedding savings account and add to it on regular basis. Set a realistic budget then make sure everyone sticks to the budget.

Although learning to save is important, many young couples will need ways to finance the purchase of their engagement ring or wedding, aside from savings alone. Some larger jewelry retailers offer competitive rates for financing your purchase, but consumers should be wary of deals that seem too good to be true. For example, deals featuring 0 percent interest for 12 months may actually charge you all 12 months of interest after 12 months and one day. When financing for large purchases make sure to understand the full cost of the purchase, including finance charges or charges for late payments.

A bad credit score and a load of debt can really put a damper on newlywed bliss, so credit should be used only when necessary. Young adults should remember a credit card is similar to a loan, and interest will cost them more in the long run.

Life is expensive and necessities like taxes, insurance, utilities, and interest on credit cards and loans are unavoidable costs young people should be prepared to pay. These are often overlooked and less obvious than everyday costs such as gas and groceries.

For parents or couples who may already be homeowners, a home equity loan from the bank or home loan lender may make sense because the interest is usually tax deductible and the rates are typically lower than credit cards. But remember, a home equity loan is borrowing against the equity in your home, so consider all your future financial obligations when thinking about borrowing against one of your most valuable long-term assets for a one or two-day event.

The views of this article are for general information use only. Please contact and speak with a subject expert or your banker when specific advice is needed.

*Source: USA Today, Average couple spends $26,989 on wedding; many break budget, August 10, 2012 http://usatoday30.usatoday.com/money/perfi/basics/story/2012-08-09/wedding-costs/56921020/1.

Tags: Budgeting, Financial Education, Savings
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