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

Wealth Manager
Premier Financial Advisors
14 E. 60th St. #402
New York, NY 10022
(212)752-4343 *31
Securities and certain investment advisory services offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Premier Financial Advisors, Inc. is a Registered Investment Advisor. First Allied Securities & Premier Financial Advisors are not affiliated entities.

One thought on “How to Pay for a Wedding”

  1. Interesting… How much does the guests, giving the bride and groom money in an envelope, give back in avergage to cover for the wedding? Does the father of the bride still pays for it? What if she is an orphan? And first, how do you get your partner to commit for life!!! I think this article should be much more extensive.

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