__By Lauren Bringle, AFC® __
Weddings can be pricey, to say the least. But were you aware that expense, if not handled well, could also damage your credit, depending on how you pay for it?
Today, the average American wedding costs over $33,000. In some states, that number is even higher. And in this age of Instagram, it can be tempting to rack up credit card debt or take out a loan to have the perfect, picturesque wedding.
Yet starting out deeply in debt isn’t the best way to begin a marriage, since regular disagreements about finances are one of the top indicators for divorce. Probably not how you want to start the “honeymoon phase” of your relationship.
Who am I to talk about this? Well, for one thing, I once planned a wedding for less than half the national average wedding cost. I didn’t skimp either. There were 100 guests and dinner was included – on a Saturday.
Needless to say, I learned some hard rules about budgeting for wedding expenses.
Now without further ado, here are some suggestions for planning a wedding without damaging your credit.
Remember that your wedding isn’t about the stuff–not really. It’s not about having the fanciest getaway car, or that fantasy location at a costly resort. It’s about committing to the person you love. That ceremony, at its core, doesn’t cost much. All you really need to get married is a marriage certificate, an officiant, and a few witnesses.
Everything else is a non-essential expense. Yes, even the cake!
Many couples get tunnel vision when it comes to the big day. They want a blowout fairy-tale event, but fail to look past it to the life they want afterwards. So before you spend all your money on a single event, it’s time to get real and ask yourself the tough questions:
First, do you really want a big wedding?
Remember that big weddings last as long as small weddings, which is really just a few hours. That time flies by far too quickly, and to some people may not be worth the cost. Do you really need the expensive venue with the expensive food with the expensive credit card bill afterwards? If the answer is yes, then your next question should be to ask yourself what you’re willing to sacrifice to make that happen.
With credit card interest rates at an average of 18%, maxing out your credit card for a wedding could mean you’re still paying for it years later. And if something comes up, or you’re not able to pay it off, you could potentially damage your credit and hurt your credit report.
Second, would you rather put that money towards something else in the future?
Rather than having a big wedding, is there something else you’d like to put your money towards in the next few years? Like a home for you and your spouse, or possibly your future kids? If the answer is yes, you might want to have a smaller wedding so you can attain your future dreams faster. After all, you’ll need some money – and good credit – to make those dreams happen.
If, after reviewing your finances, you realize you have oodles of money to make your dream wedding happen, then go for it. Otherwise, it’s time to get into a budget mindset for your big day.
As tempting as it might be to have a monogrammed dance floor (seriously, I’ve seen it before), or top-shelf champagne to pass at your toasts, the truth is, if it doesn’t fit your budget, then you shouldn’t get it.
Instead, set a budget for your wedding before you do anything else. Before you book the venue, before you choose the food, before you get a dress, before you buy anything.
__A few tips for setting your budget: __
I understand that approach doesn’t line up with the fantasy of wedding-dress shows where people have a budget of $1,200 but decide to “just go for” the $5,000 dress (not including alterations). But unless you want to rack up that high-interest credit card debt, just say no. Besides, there are so many options for affordable wedding dresses these days, you can easily find your dream dress for less.
Remember, if your credit utilization ratio (the amount of available credit you use) is out of whack, this could make you and your future spouse less desirable candidates for future loans. That includes car loans, mortgages, and other loans you might need to build the life you want together.
Experts recommend keeping your credit usage to under 30% of your total credit limit. Using too much credit could negatively impact your credit score. If racking up wedding debt on your credit card could push you over this limit, it might be time to reconsider your budget.
In a nutshell, if you can have the blowout wedding while not overextending your credit utilization ratio, while making your monthly payments on time and in full, and without damaging your credit score, then go for it.
If not, you may want to go back to step #2 and think long and hard about the life you really want after the wedding.
Once upon a time, some friends of mine wanted to get married, but they really did not want to go into debt to do it. Their solution? A B.Y.O.B. pizza party after their elopement.
The best part? Low overhead costs and no debt. Instead, they spent a few hundred dollars on pizza and invited everyone they wanted to celebrate with them.
My point here is, your wedding can look like whatever you want it to. It doesn’t have to be a formal wedding, with a full sit-down meal in a glamorous ballroom with a giant dress. Have a picnic in the park, recruit your family to help make finger foods for the event, have a wedding in your own backyard.
Do whatever you want and need to do to make it yours and put your own unique mark on it. People will love it because they love you. Besides, DIY is all the rage on Pinterest these days.
Do your parents have high expectations for your wedding? Do you have a million cousin’s-friend’s-neighbor’s-acquaintances or whoever jonesing for an invite? Well, as hard as it is – and believe me, I know – you have to set boundaries. Otherwise you’ll end up with more guests than you can pay for pretty quick.
“There’s a per-head cost for food and liquor, and these two are typically the biggest expenses of the whole wedding, so changing the guest list size is the surest way to increase or decrease your costs. On top of that, the smaller the guest list, the more you’ll save on all your other details, including décor, stationery, favors and rentals, because you won’t need as much of everything,” The Knot writes.
Even at $50 per person for 100 people for just food, you’re already looking at $5,000. That doesn’t include the cost of tables and chairs, additional catering fees, or even non-alcoholic drinks, much less alcoholic ones.
It adds up quickly, people. Especially if you have a large, close-knit family.
Remember that unless your parents or relatives are 100% covering your wedding, you get to set the boundaries. And that includes setting boundaries with the number of guests you invite. Remember, it’s your day, your budget, and potentially your credit card debt that could follow you for years and impact your credit score.
Saying “no” is hard.
Saying no to the people we love is no mean feat. I know it’s tempting to go into debt to keep your family happy, but you have to cut off the guest list somewhere. If you don’t feel comfortable saying no, recruit someone you trust who’s really good at it to help you.
__A few other tips to keep your guest list at a minimum: __
Being smart about planning your wedding isn’t just about taking care of the external details, it’s about getting on the same page internally in your relationship too. While nearly 65% of millennials agree that talking about finances is necessary for a successful, long-term relationship, more than half wait to talk about joint accounts until they’re married.
Yet nearly 35% of people surveyed who were experiencing relationship stress said that money was the primary cause of friction.
My educated opinion? Don’t wait until after marriage to have the talk about finances. In fact, the sooner, the better. I mean, maybe not on the first date, but definitely before you say “I do.”
Talking about money doesn’t stop with important financial habits like spending, saving, and budgeting for your wedding. Credit scores can reveal quite a bit about a person’s relationship skill and level of commitment, according to a study from the Federal Reserve Board.
If you’re planning on opening joint accounts or applying for joint loans after marriage, remember that lenders look at the lower of the partners’ credit scores when considering things such as interest rates. Thus, credit scores could have important implications for a couple’s use of:
All of which are factors that substantially influence the prospects of relationship success, which is why you should both be on the same page.
Worried about one or both of your credit scores? Don’t worry, you can build better credit – together. There are several options you can choose for improving your financial futures.
Ultimately, when it comes to planning a budget-conscious wedding, remember you can have your dream day without ruining your financial future. All it takes is a little creativity, a focus on setting healthy boundaries, and the ability to say no to unnecessary expenses, so you can say yes to the life you truly want.
Since you’re building a life with your partner, it’s important to know what you’re getting into financially too, so you can make smart decisions – together.
Lauren Bringle is an Accredited Financial Counselor® and Content Marketing Manager with Self Financial – a financial technology company with a mission to help people build credit and savings.