Weddings are expensive
By Gary Parsons
It is said that a white wedding dress was popularized by Queen Victoria in the 19th Century. In wearing white, she signaled the requisite wealth to wear a dress that could so easily be ruined and was likely to be good only one time. By the end of the 19th century, the white wedding dress was adopted by the elites as a display of status. In a way, the genesis of this tradition epitomizes the financial irrationality of wedding ceremonies and need to “keep up with the joneses”.
We often discuss how to prepare for major financial events, the financial uncertainties in life and retirement. Many of those conversations involve financial responsibility and utilization of products and programs designed to mitigate risk and prudently plan. From college to home purchases to retirement, there are incentive laden programs and services to help spread the cost burden over decades.
So, what about the incredible expense associated with a wedding, a one day event? According to The Knot, the average American wedding now exceeds $30,000. The short answer is to plan and save, budget and consider a lower cost affair. Let’s put that sum in context.
The impact $30,000 could have on your life is not inconsequential. Consider that $30,000 is equivalent to a 10% down-payment on a $300,000 mortgage. That money could serve as the basis for what is the biggest investment in most people’s lives, a home. While real estate does not always appreciate in value, it’s all but guaranteed you will get more than one day of use from a new home.
Alternatively, let’s assume you get married in your early to mid-twenties and retire in your mid-sixties. That is effectively forty years that the monies spent on the wedding could have been invested. If that $30,000 was invested in an account earning 6% annually over the next 40 years, it could grow to over $300,000.
Finally, according to Florida State University’s website, the average cost of tuition for a full-time, in-state student is about $6,500 per year. That means for the cost of that one day wedding, the tuition for an entire four-year degree at a major state university could be covered.
I am not trying to crush the hopes and dreams of young women all over Tallahassee, but rather impress upon you the potential impact of the bill. Each of the aforementioned events involve decades of purposeful planning. And, each of those events represent investments in assets or education. A wedding, on the other hand, is a really fun day. Is it worth it? Set a budget, look for lower cost alternatives when available and don’t worry about outdoing anyone else.
The hypothetical investment example is for illustrative purposes only and should not be deemed a representation of past or future results. The example does not represent any specific product, nor does it reflect sales charges or other expenses that may be required for some investments. Investing involves risk and the potential to lose principal. This article is meant to be general in nature and is not intended, and should not be construed as personal financial advice. Please consult your financial advisor prior to making financial decisions. Gary Parsons is a Financial Advisor with Waddell & Reed and can be reached at 850.894.9950. Waddell & Reed, Inc., Member SIPC (04/17)