The Art of Paying for Weddings: How it Really Gets Done

Let's talk about financing weddings.

As you've doubtless heard, the cost of the average wedding is inching close to $30,000 in many markets.

And we've all heard reports of couples who put a huge chunk of the cost on credit cards, only to find their finances sadly underwater long after the gown's packed away and the confetti's swept up.

The Rodney Dangerfield of Life Events?

It seems like weddings, despite their predictably hefty cost, don't get the same respect that other major life expenses enjoy. Most parents with the means will start seeding their children's college fund as soon as they're born. With some weddings costing as much as a degree at a state university, why don't they get the same treatment?

It's the timing, says Ted Geoca, president of MaxOutSavings Advisors and host of a popular Houston radio show on financial management. "You just don't know when a wedding's going to happen," says Geoca. "When you have a child, the clock is ticking and in 18 years you know you'll need to pull out some money for college.

"But weddings are different. Some people marry in high school; others aren't going to get married until 20 years after they graduate. With that kind of leeway, it's hard to know how much to put away, or when to save it. And if you're not careful, any money you do put away can end up disappearing over time — when the car dies unexpectedly, or the house needs another room.

"Unlike college, you're dealing with a situation that's much more unpredictable. Sometimes a son or daughter thinks, 'this is the one,' and then three months later, it's 'forget that.'"

But the Show Must Go On

As a result, says Geoca, weddings tends to get paid for with a patchwork of approaches — and a lot of family intervention. "Parents suddenly notice their daughter is seeing someone, and that it could be serious," he says. "What we usually see is parents and the couple themselves start to save a year or two ahead of time ... the long-term planning is still pretty much limited to college.

"Of course, many weddings happen within 12-18 months of the heads-up, and some even sooner, so that can make it hard to find the money."

So how do parents and couples manage on such a short time span? "They save, scrimp — and beg and borrow," he says. "And it's not uncommon for parents to take a chunk out of their retirement. There can be a 10% penalty involved, and we generally discourage people from touching it, but this is one life event where I think a case could be made for some borrowing.

He adds, "The good news is that the kids are generally out of college by this time, so parents usually have a bit more money."

He also points out that it's not unusual for grandparents to set up a wedding fund around the time their grandchildren reach marrying age.

It's a Family Affair

Saving for college seems so simple: College savings portfolios abound, and everyone knows that educational savings bonds make the perfect insert for those early birthday cards covered in glitter, ducks and lambs. But weddings just aren't that cut-and-dried.

"The right approach is to break it up," advises Geoca. "Pulling together $30,000 in a short period of time is an enormous hurdle. But if you've put away $10,000, it becomes more manageable.

"If you've got more than one child," he says, "it's probably a smart idea to stash away about 10K. A good time is right around college age. Of course, many parents feel strapped when their kids are still in school, but grandparents might have some money around now, and be willing to contribute.

"When your kids finally graduate, it can get easier," he adds. "I'd put some savings in a general fund — you don't know which son or daughter is getting married first. You can't be too aggressive, and you also can't lock that money up, since you won't know when you'll need it."

Given all that, Geoca suggests that parents start a cushion fund in an ordinary savings account around the time their children finish school. "Just put it in a mutual fund, or a conservative balance fund: 60% stock, 40% bonds," he says. "Or even a CD. This probably poses the best balance between availability and return. I wouldn't do an annuity because of the penalties if you take the money out early."

But the bottom line is that weddings are a family event, and it's a lot easier to pull them off if everyone chips in.

"Putting something away ahead of time is extremely helpful, but if the couple, the parents and maybe the grandparents save aggressively for a time, you can probably do it. Just look at everyone who's willing to contribute, and all your reasonable sources for funds. Don't leave stones unturned, and don't be afraid to ask family members for help."