In my years as a financial advisor, I counseled many young couples regarding their financial matters. In that time, I never heard a newlywed couple say they wish they'd spent more money on their wedding. In fact, a year or two after the wedding day euphoria dissipates and couples start thinking about the rest of their lives together, most couples wished they'd spent far less cash on their big day. Let's face it: A wedding day is just one in the long calendar of our lives.
A survey of 18,000 U.S. brides married last year found that their average wedding cost $27,000. And according to Carley Roney, co-founder of The Knot, "In 2011, 20% of U.S. couples spent more than $30,000, and 11% spent more than $40,000 on their weddings." And that isn't even including the honeymoon that, according to Bankrate.com, costs roughly $5,000 on average.
With financial problems cited as one of the biggest causes of divorce, draining our piggybanks on our wedding day holds massive potential for starting marriage on the wrong foot. Instead of plunking down a whopping $32,000 on average (wedding plus honeymoon), let's see what financial options we open up by spending far less.
Let's assume you and your spouse-to-be spend half the average amount on your big day and save the other half. Regardless of your financial goals, $16,000 is a great head start. Consider how this hypothetical savings can make an enormous dent in the six most common financial goals I heard from young couples.
Goal No. 1: "We want to buy a home"
The $16,000 saved secures half of a traditional 20% down payment on a $160,000 house. And with mortgage interest rates at an all-time low, getting in a house now as opposed to in a few years -- when rates may very well be higher -- can also save you big money over the life of your loan.
Goal No. 2: "We have credit card debt that we'd love to pay off"
According to NerdWallet, the average credit card debt per indebted household is roughly $14,500 and the average APR on credit cards with balances is nearly 13%. Assuming an average level of debt, a couple could wipe this out completely with the above-mentioned $16,000 savings. Otherwise, the interest you pay could add almost $2,000 every year to your expenses.
Goal No. 3: "Our dream is to travel the world"
A couple could use the $16,000 saved to take one $4,000 vacation every other year for nearly the next decade. A honeymoon on a scaled-back budget doesn't sound so bad now, does it?
Goal No. 4: "Someday we want to have a child. Ideally, we'd like to pay for our kid's college education"
One of the best ways to help your child with the rising cost of college is to get a head start on savings. By investing in a college savings plan returning an assumed 7% annually for a future child, the $16,000 saved would grow to an impressive $67,000 in 20 years.
Goal No. 5: "We want to start our own business someday"
Invested at 1.75% annually in a five-year certificate of deposit, the $16,000 saved would give the couple a $17,450 start on their own business. This cash could be the difference between chasing a dream and letting it die on the vine.
Goal No. 6: "We'd love to retire early"
For a couple marrying when each of them are 30 years old, the $16,000 savings could grow in a retirement account at an annual 7% assumed rate of return to equal a remarkable $122,000 nest egg when the couple is 60 years old.
Before shedding tens of thousands of dollars on your walk down the aisle, strongly consider jump-starting your financial future with a portion of this money. Beginning your relationship with an open and honest dialogue about personal finances is invaluable. Not to mention the arguments this may save you both in the formative, early years of your marriage.