Full financial planning isn’t just investments. When setting up a financial plan, a personal financial group should discuss your specific situation: What is your risk tolerance, what are your retirement goals and what big life events do you need to save for? When you don’t consider some of the big costs that will come up as you near or enter retirement, having to pay for them without a proper budget can affect your bigger financial plan.
One event that often gets overlooked is a child’s wedding. How much should a wedding cost? And as the parents of the bride or groom, how do you enjoy the event yet remain practical?
According to The Knot, the average wedding costs $33,391. This means that only a few purchases might ever in your life (maybe a home or a car) exceed the price of a wedding. The event is a big deal, but so is the price.
If I put my financial planner hat on and look at the long-term impact of $33,000, I get an even more startling perspective. If you were to invest this amount of money for 40 years at a hypothetical 10 percent rate of return, your $33,000 would turn into more than $1 million! Wow!
I understand that it’s hard to convince many couples who’ve been shot by Cupid to invest the proceeds of wedding money. But is there a way to get that large number down a little bit?
Fewer guests might be the best starting point. The average number of guests for a wedding is 136. This means that you are spending about $250 per guest. (I don’t think you’ll get a return on that investment relative to the gift at the front door. Crock pots and toasters are not usually selling for $250.) When you put a dollar value on each guest, you might think twice about the headcount – and your high school art teacher might not get that invite. Additionally, you may reconsider things like an open bar.
The most consistent theme I have seen in the last several years is the number of over-budgeted weddings. Why are weddings, like home improvements, typically over budget? It’s because they are often one-time events that allow a parent to “justify” luxury. According to research, 23 percent of people don’t even go into planning a wedding with a budget, so if you start with one, you deserve some credit!
If you are savvy enough to think ahead, consider saving for a wedding years before it happens. Sure, you may have to start saving before your baby girl or young man even goes on the first date with the future spouse, but it’s a smart move. The average age of someone getting married today is 28, so when your child turns 20, it might be time to start setting aside money each year for the forgone conclusion. You don’t have to let your child know about this strategy, as it might create unnecessary pressure. However, it could provide some peace of mind, make the whole experience more pleasurable and provide a way to possibly avoid what many of your peers are doing to finance the big day – taking a home equity loan!
There are countless ideas online for ways to save money on a wedding. I know my wife and I personally made our own invitations. We made our own slideshows. We tried our best to be frugal and there is no doubt that memories were not diminished.
If you want to be more accurate in your planning for a future wedding, visit www.costofwedding.com to learn more about all of the unknowns that go into one of the most important days of your child’s life. And start saving today.
Paying for a wedding can be even more stressful when you’re also taking care of your parents. When this happens, your finances can be stretched very thin.
According to a Pew Research study, one in seven middle-aged adults provides financial support to both a child and their aging parent. This can include paying for your parents’ home health care, medical deductibles and general room and board.
It’s hard enough to take care of parents, but when your kids need help at the same time, it can create even more strain on the wallet.
I have one client who falls into this sandwich generation and has to take care of her 85-year-old mother’s finances, doctor visits and random requests, as well as her adult daughter who moved back in while going through a nasty divorce.
My client is sandwiched between adult children with life challenges and aging parents.
And she’s not alone. This is the new normal for many Americans.
If you fall into this same category, working with a financial planner can be incredibly valuable. Make sure you look for a personal financial group who takes a holistic approach to financial planning and gets to know you and your specific situation before setting up a plan for you to follow, because there is no one-size-fits-all solution when it comes to financial planning. Investors need to have goals they can reach, guidelines they’re able to follow and tips that can help them accomplish the things they need to, such as paying for a child’s wedding expenses or a parent’s health care costs.
PAX Financial Group is one of these firms. With more than 100 years of combined experience with financial planning, the advisors at this San Antonio, Texas-based firm are deeply committed to helping clients achieve their vision of financial success. Contact us to see how we can help.
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