Wedding financing: saying "I don't" to wedding debt

Many engaged couples and their families have to decide how to pay for a wedding amidst escalating wedding costs. Ultimately, the decision comes down to reigning in costs and expectations in advance or facing an overwhelming pile of bills that cast a shadow over the honeymoon – and beyond.

The cost of a wedding

American culture urges couples and families to lose caution, says Denise Hughes, a California-based personal finance consultant and speaker.

But parents are in a unique position to help couples sidestep debt because most people in midlife know how it feels to deal with the aftermath of a spending spree. Couples “don’t realize the heaviness of debt,” says Hughes. “They don’t know how it will feel afterwards. And it’s hard to realize that the financial process stretches beyond that day. There’s a lot to get excited about.”

Consumers Union, the nonprofit that publishes Consumer Reports magazine, published an analysis of wedding spending that found that 11% of families took out wedding loans, 10% borrowed from retirement savings, 10% took money from other investments while 41% drew on their savings.

It may take the combined resources of couples and the bride’s parents to cover the cost of a wedding, which averages $33,900, according to the 2019 survey released by wedding website The Knot.

Wedding costs can quickly add up, as Consumer Reports recently found 28% of special event vendors charged more for weddings than for identical “family gatherings.” In many cases, special-event taxes are levied by local governments, not to mention gratuities of 20% or more that are automatically added to the bill.

With new options for wedding lending coming on the market, families need to develop strategies for crafting a special day without overpaying. Here are three types of wedding debt to avoid.

1. Wedding loans

Specialty companies now offer consumer loans directly to families and indirectly through vendors, such as caterers, photographers and florists. That means that you might be offered a short-term wedding loan by a vendor while you are in the middle of deciding what exactly to get and how much to spend. The chance to go over the top with a menu, venue, dress or other aspects of the celebration is hard to resist when easy money is offered at the same time.

Wedding consultants say one way to focus on what is most important is to decide on two or three elements to prioritize – say, the venue, flowers and dress – while putting other elements in a lower spending category.

“It’s a candy store,” says Hughes of the enormous menu of wedding options. “It’s easy to lose track of what’s important. Find out what is most important to the couple. What do they want people to most remember?”

2. Credit cards

Many couples open single credit cards to charge all wedding expenses and then pay for the honeymoon with accumulated airline and travel amenity points. That strategy might work if the couple has a history of self-restraint and if the existence of the card won’t catalyze extra spending rationalized by the point payoff. But if the couple hopes to soon buy a house or start a family, using a honeymoon credit card for wedding financing might cloud those goals.

3. Gambling on gifts

The most insidious debt temptation is to hope cash gifts will offset wedding loans and expenses. Wedding planners say it is common for couples to hope overruns and indulgences will be covered after the fact by guests’ generosity.

The fallacy, of course, is it’s impossible to know if the cash will materialize or if the couple will end up with a dozen blenders and 10 slow cookers instead.

Simply applying smart consumer habits to wedding purchases can help couples stay the course. Planning a wedding is a chance to set a powerful and positive precedent for talking honestly about money, says Hughes. “The real killjoy,” she says, “Is letting the debt rack up and letting that heaviness rest on a new marriage.”

Once you decide on the amount of money you’re willing to spend on your wedding, it’s a good idea to protect your investment. Weddings are large events with many moving parts, and you should be covered if something goes wrong. With wedding liability and cancellation insurance, you can rest easy knowing you’re prepared for anything on your big day.