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North Hills Monthly

For Richer or for Poorer...Financial Planning Wise for Wedding and for Life

Jan 30, 2019 10:10AM ● By Vanessa Orr

According to The Knot, in 2017, the average cost of a wedding was $32,641. And while many couples go all out for this big event, those who set a realistic budget—and keep to it—can find themselves heading into their life together with a lot less debt. What’s even more important than the wedding budget, however, is discussing financial matters up-front; that way, the new couple can not only identify short and long-term goals, but start their lives together on a firm financial footing.

Planning for the Wedding

Everyone wants their wedding to be special, and when you add in everything that’s required—from the bride’s dress and groom’s tux, to the reception hall, food, flowers, decorations, transportation and more—there’s a lot of expense involved. 

CNN reports that on average, a bride's parents cover 44 percent of the budget, and the groom's parents pick up 13 percent. The couples themselves pay roughly 42 percent of the cost, and nearly half of the couples CNN surveyed reported that they went over budget. 

So how can couples—or their parents—best prepare for this big event?

The best advice for parents of future newlyweds is to start planning early. “When we talk about retirement planning with people, we look at what types of large expenses they may encounter in their 40s and 50s—for example, if they have children who they expect to get married down the road,” said Earl Bayer, managing partner, BDM&O Financial Group. “We discuss setting aside money for these types of expenditures—whether it’s saving money for a child’s college or wedding, or even a second home. 

“Over the course of 10 years, if you’ve set aside $100 or $150 a month for a wedding fund, you can have $25,000 in savings by the time the occasion arrives,” he continued. “And if your child chooses to have an informal wedding or to not get married, what’s the downside? You’ve got money set aside that you can use to help them get started in a home or for something else.”

Because of the longer time frame, Bayer says that investors can take on more risk, investing in stocks in mutual funds or diversified investments, and then move the money into safer investments such as bonds or savings accounts to reduce account volatility once the engagement is announced. But he cautions newly engaged couples who are considering investing as a way to pay for the big day that it may not be the best approach. 

“The average planning time for a wedding is 14 months, so from a financial standpoint, there’s really not enough time for them to be confident in the return they can expect from any investment class in which they choose to place funds,” he explained. “I would caution them that investing in anything for less than three years might entail too much risk.”

Planning for Life

While it’s fun to focus on the big day, couples need to remember that they’re making a lifetime commitment. And that means talking openly with each other about financial issues. 

“Far too often, I have couples in my office who have never talked about past debt, current savings, financial goals, etc.,” explained Financial Advisor Traci L. Conlon of Edward Jones Investments. “It’s important to have both basic and more in-depth financial conversations.”

The investment firm provides a checklist that helps couples focus on financial goals, and advisors work with them to determine the amount they need to reach those goals.  

“We work together using an established process to focus on risk, goals, budgets and more,” said Conlon, adding that couples should also schedule regular reviews with their advisor to see if they are staying on track. “Life changes fast and we want to work within those changes to help our clients achieve their financial goals.”

Planning for a financial future together includes setting up the basics, which range from listing assets and debts to develop a combined statement of net worth, to deciding whether to merge accounts and delegating which person will manage the day-to-day finances. Couples should review credit reports to identify and correct errors, try to eliminate debts with high interest rates, and consolidate student loans, if at all possible.

Other considerations may include refinancing a current home, evaluating health insurance options, determining the appropriate amount of life insurance and considering income tax implications, including joint filing, among many other issues. Having a financial advisor from the start of the relationship can help with this planning, and set couples up for a more secure financial future.

And who knows? They might even offer some more sage advice.

“Don’t spend too much on chair back covers that you won’t remember two years after the wedding,” said Bayer. “Invest in the things that you’ll remember 10 or 20 years from now.”

To learn more, contact Earl Bayer at ebayer@bdmofinancial.com or Traci Conlon at Traci.Conlon@edwardjones.com.