Can You Afford Your Dream Wedding?
With the cost of the average U.S. wedding in excess of $25,000, good financial planning could mean the difference between smart affordability and months of debt. No matter how high (or low) the final price tag, it’s wise to understand your financing options, and to make informed decisions around how best to pay.
Times have changed. Once simple affairs (the average nuptials in 1945 cost only $2,240), weddings have become more elaborate over time. By 1990, the average bill rose to $15,200. Costs peaked in 2007 at $28,730. Modern couples need sophisticated payment strategies since the traditional financiers (the parents of the bride) have become less able to pay for high-priced affairs. Today, most couples use several financial instruments to manage, save, and pay for, their weddings.
Some couples delay getting married until they can pay for the event outright, storing funds for the big day in a simple savings account. Savings accounts are highly liquid, earning interest while also making funds available whenever they are needed.
Certificates of Deposit (CD):
If vendor payment deadlines are several months to a year away, a CD that carries a better interest rate than a simple savings account could be a great place to store funds earmarked for the wedding.
Couples wishing to marry before they can pull together funds to cover all wedding costs may consider a personal loan. These tend to have lower rates than credit cards and carry fixed—not revolving—interest.
Though it is common for couples or their parents to incur credit card debt in order to pay for a wedding, the daily compounding interest found in most credit card terms may make this the least attractive form of financing.
Couples with other mechanisms available to them, such as 401k loans or personal loans from family members or friends, may consider opting for those. Such strategies have no credit implications and may involve little to no interest.
So, can you afford your dream wedding? For more guidance on cutting costs and paying smart, take a look at our infographic and visit our pages on savings accounts, CDs and personal loans. A wedding is a major expense—let us help you evaluate high-interest savings options and low-interest financing options that will place you in the best financial shape for your big day.