The wedding of your dreams – how to save, budget and pay for it

8th April 2014

The average cost of a wedding in the UK is said to be not far short of £20,000, but the reality is your wedding day can exceed this figure by a long way. Few couples will have this sort of spare cash lying around, so how can you best work out how much you afford to spend on your big day? Jessica Cook, a private client adviser, looks at the issues.

Well, first off it is important to get things the right way round. This should be a realistic figure that is affordable and attainable without getting into debt. Don’ t plan and buy and then work out how much your big day is going to cost you.

Rather, instead you should be asking: “What can we afford to spend on our wedding?” Only once you have realistically worked this out will you have an idea as to what you can both achieve. Then aim to do the best possible within that budget.

Start by creating a list of every expense you can think of for your wedding. This will include some very obvious costs. It helps to work out the number of guests, to price the venue for the ceremony and the reception, the food and drinks, the music, cars, the photographer…

The list goes on! It may make sense to do research on the internet and perhaps ask friends how much they spent on their weddings. Then it’s time to sit down together and work out exactly what your household income and expenditure is. What do you have left over? If your parents or friends offer to contribute, take this into account.

As a financial adviser, I would stress the need not to sacrifice any other saving commitments you may have and work out a realistic sum that you can afford to save every month between you.

Of course many couples won’t have a lump sum of cash simply lying around that they can spend on their big day but there are other ways of accumulating extra money.

Small sacrifices can boost your wedding piggy bank. If your big day is a year away, cut out something today that you buy every day. If you cut out your daily Starbucks at say three pounds per day, you’d have 365 x 3 pounds extra to spend, making £1,095!

Compound interest is what you want to be aiming for here. Compound interest is different to simple interest that you will gain in a standard deposit account. With simple interest, interest is only paid at the end of a specified term.

Compound interest means you earn on the money you deposit, and on the interest you have already earned, thus you are earning interest on top of interest.

Let’s look at the numbers – If you invested £10,000 and earned 5% growth, you would earn £2,834 in compound interest after 5 years (probably a little longer than most couples would want to wait for) but it gives you a total of £12,834.

This is because every month the interest is added to your account earning interest on the interest.

You will hopefully have an idea of a time frame so now you will have a rough idea of the savings you can accumulate together over said period of time. This should form the building blocks as you now have an idea of the type of wedding you can truly afford.

Sit down and decide what’s most important and allocate your budget accordingly. This will not be the same for every couple, but you may find that it’s more important to have fewer guests and spend more on food, or that a simpler wedding with all of your extended friends and family is your preference.

Now you are in a position to write down the estimated cost for each and every item separately.

Many couples will feel they need to resort to a loan of some sort but if you can avoid borrowing then do it. If you have no choice then an important rule of thumb is to try not to borrow more than you can afford to pay back within one year. And if you are going to borrow, make sure you do it the cheapest way. Ask yourselves the following questions

Are we borrowing the cheapest possible way?

Can we afford the repayments?

Can we pay them back in a year or less?

Do your research and seek out the best offers in the market place. Avoid dangerous high cost credit. If you are going to splurge on your wedding necessities by using a credit card you must make sure you repay the borrowed money in full before the cheap rate ends, or the interest on the card increases.

You don’t want to be financially crippled and in debt for the first few years of your married life, it’s a pointless waste. So be sensible.

Often the main challenge is not to get swept away with the excitement so that you end up over spending. There are so many different parts to a wedding and if you go over budget on just a few your debt can easily start to rack up.

Be specific about a budget for each item. If you really feel you need to pay extra for something try and justify how you will cover this extra cost i.e. Will you put the wedding date back three months or will you sacrifice your yearly holiday?

One option is of course to give yourselves more time. Put the wedding back 6-months and you will have another 6 months of compound interest.

Choose where you want to splurge. If you have dreamed of a dress fit for a princess or a banquet fit for a king there really is nothing stopping you, but realize that you may have to cut back in other areas. Creating a clear budget and list of wants and needs at the start will allow you to ‘splurge’ effectively.

When it comes to finances, saving for a wedding involves compromise and commitment. Once it is all over there will be new milestones to save for such as children, property and retirement. A wedding is of course a wonderful celebration and every couple wants it to be as perfect as can be, but don’t jeopardize your future buy burdening yourself with unnecessary debt for the sake of one day when you have a whole lifetime of other financial commitments to get though.

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