Tying the Knot: What’s the Smartest Way to Pay?
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(ARA) - From Emily Post to the clergy to well-meaning grandmothers, engaged
couples may feel that everyone is offering them advice. However, many who are
planning the big day neglect to seek advice for one of life’s most common
challenges: managing finances. Given the national average of wedding costs today
-- more than $22,000, according to the American Wedding Study from Conde Nast’s
Bridal Infobank -- that could prove to be a mistake. In addition, engaged
couples are shouldering more of those expenses than ever. In an April 2004
survey of registered users of the online wedding authority, theknot.com, more
than 75 percent of respondents said they expect to pay for at least a portion of
their weddings.
Seeking financial guidance
To better manage escalating wedding costs, says Beverly Clark, author of
Planning A Wedding to Remember, couples should first speak with a representative
from their financial institution. “Many banks offer advice without charge,”
says Clark. “Take advantage of that guidance before you start selecting
reception halls and caterers. A trusted financial advisor may be closer than you
think.”
Often, effective wedding planning begins at a bank offering convenient branch
locations. Clark recommends Bank of America, which has more locations nationally
than any other financial institution. Personal bankers at banking centers can
provide helpful information on setting and living within a budget; exploring
short-term savings vehicles; and determining when it’s realistic to purchase
that first home together.
Setting a budget
Clark also points out that the first step a couple must take in managing
wedding finances is to determine a realistic budget -- long before they walk
down the aisle. Half of the participants in the Knot.com survey said they expect
to exceed their wedding budget.
“Exceeding your budget is a big mistake,” says Clark. “Couples should
sit down and decide how much to spend and what matters most. They should decide
where they will compromise first -- number of guests, venue, etc. -- and what
their bottom line is going to be.”
Saving for the big day
The need to stay within budget -- while anticipating major expenses -- makes
it more important than ever for couples to save for their wedding, as they would
any major expenditure. However, among theknot.com survey respondents who plan to
spend at least $10,000 on their wedding, 17 percent said they have put no money
aside in savings for their big day. Less than 35 percent have saved more than
$3,000.
Many banks offer a range of short-term savings products that make saving
easy. For example, Certificates of Deposit (CDs) provide the security of FDIC
insurance and higher returns on a customer’s investment. CDs offer consumers
more choices than ever, including a wide range of maturation dates and
combinations of fixed and variable rates.
Clark points out that saving for a wedding must begin well before couples set
a date. “The average engagement is 12 to 16 months, which realistically isn’t
much time for anyone to save $10,000 or more. This is especially true in light
of other expenses, such as honeymoons, new homes and furniture.”
Exploring financing options
Couples who do choose to finance all or part of their weddings are finding
greater choices in credit and financing.
For homeowners, an often-overlooked option is a home equity line of credit.
In theknot.com survey, 43 percent of engaged couples, either individually or
together, reported they already owned a home. Gene Morris, a senior vice
president in Consumer Real Estate with Bank of America, says, “For the
increasing numbers of engaged couples who also own homes, home equity credit
lines provide flexible financing options with low interest rates. At the same
time, couples who don’t yet own homes can learn about opportunities to get on
the track to home ownership while rates are still low.”
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