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When it comes to planning your big day there’s a lot to consider: the venue, the dresses, type of flowers and cake, to name just a few. However, before you dive head first into wedding-planning mode, it’s crucial to work out the financial aspect of your big hoorah.
According to research conducted by finder.com, Americans borrowed $3.48 billion in the past year to tie the knot, with an average amount of $3,082 borrowed per person. While seeking outside funding might be essential to make your dream day come to life, understanding all of your financing options and the terms that accompany them will not only be important for your financial health, but also your partner’s future happiness.
Marriage in America
To get a better grasp of your financial commitment before you say “I Do,” it can be helpful to understand a few current marriage trends.
As of 2017, 126.64 million (51.5%) of Americans aged 18 years and older were married, according to Census Data. And, in 2017, 1.40 million American adults were married. In the past year, 1.1 million Americans borrowed for weddings, meaning 80.6% of all weddings had external financing.
It appears that most brides and grooms are shifting their focus, and money, on providing a unique experience for their guests, having spent roughly $268 per guest in 2017. However, while the cost per guest has risen over the years, the number of guest invites have decreased.
Each couple is unique in their visions and desires for their wedding day, but one factor every couple should consider in pursuit of their special experience is how to make proper financial decisions to ensure financially happily ever after.
Deciding how much to borrow and which borrowing option is right for you depends greatly on you and your partner’s current financial situation. When conducting analysis, finder.com assessed five borrowing methods to determine which is the most economical option.
The results determined that payday loans require the least repayment in interest compared to credit cards, personal loans, short-term payday loans and peer-to-peer lending. However, payday loans require repayment in just two weeks, which can be difficult to achieve for those who have other, more pressing, financial obligations. Those who borrowed through a payday loan paid $56.21 in interest on top of the principal amount $3,082 at an APR of 400%.
For those couples seeking a longer average loan repayment period, personal loans were revealed to be the most reasonable option. While you might see higher interest paid on a personal loan, you will be offered more time to pay it off. The study revealed that borrowers paid an average of $302.97, on top of the principal amount, but had 24 months to repay their loan and a mere interest rate of 10.57%.
Friends and Family
We can assume the best option to avoid paying interest on your loan amount is to borrow from your friends and family. If this is a route you want to consider, keep in mind that when approaching friends and family for a loan, it’s important to have a repayment plan so they know you’re serious about returning the money you are asking to borrow. Even having an informal contract written up to show the allocation of the money you will be borrowing can not only help you get a better grasp on your financial commitment, but also give your lender peace of mind knowing you have a plan.
Before committing to any one borrowing method, be realistic as to the repayment amount and time frame that will work within your budget. You should also take into account what the most reasonable interest rate might be in comparison to the life of your loan. The first steps to making the best borrowing decision are to speak to your partner and work together to compare and select the right options to fit your financial needs.
Here’s a secret, you can still achieve your dream wedding while still saving on costs for your special day. Depending on your wedding plans, there are some items that can be borrowed or even hand-made, saving you from swiping your plastic or increasing your loan request.
Reach Out to Your Circle
If you’re not the craftiest individual, perhaps you have a few friends or colleagues who would be willing to team up and help design your wedding invitations. Or consider asking a friend who owns a business or has a beautiful piece of land if you could use their property as your venue. When financial stress clouds our mind it can be difficult to think about the resources that are right in front of our face. Taking the time to consider who you know, or who your friends are connected with could result in savings in the long term.
Whether it’s catering for food, finding the best deal for an open bar or even a DJ for your after party, looking locally first could help you score some big savings in expensive areas. Local businesses appreciate your business and will be more likely to give you a deal or a discount on their services if you are offering them large exposure. Just make sure to approach these businesses in advance seeing as the preparation process could take longer than a corporate wedding company.
Skip the Gifts
If you’ve found that you had to borrow money for your wedding, asking your guests for monetary gifts could make a big difference when it comes to repaying your loan. While asking for money might not be standard protocol, a gift is basically money in material form. There are some great cash wedding registry options that makes this process seamless, such as My Registry, Deposit A Gift or Upon Our Stars. Lay out your reasons for this request, and your guests will appreciate knowing that they are contributing to the financial and emotional health of your future.
Jennifer McDermott is Consumer Advocate at personal finance comparison website finder.com. She has more than 12 years’ experience under her belt in the finance, lifestyle and travel industries where she’s analyzed consumer trends. Jennifer loves to uncover interesting insights and issues to help people find better.