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How to Afford Your Dream Wedding

Editor’s note: The following is a guest post by Ramit Sethi, author of the New York Times bestseller I Will Teach You To Be Rich and founder of the personal finance blog I Will Teach You To Be Rich. Take it away, Ramit . . .

On Saturday night, I was out with some friends, including one who's planning her wedding for next August. After I suggested she check out a nearby stationery store for her invitations, even thought it's like $14 per invitation, she looked at me and, without a hint of arrogance, said, "Oh, I'll check it out. I actually talked to my family and we have an unlimited budget for the wedding." With one sentence, I was rendered speechless. Her wedding could cost anything and it was OK.

She comes from a very wealthy family, so this isn't such an unusual thing. What is unusual, however, is that so many people will scoff at the above story — and then proceed to spend ungodly amounts on large purchases like a new home or a wedding while steadfastly insisting how absurd "most" people are. Today, I want to write about how to plan for these large life events. But be prepared — you're going to have to confront the hypocrisy that we all have when it comes to these purchases...


You are not alone...

The average American wedding costs almost $28,000, which, the Wall Street Journal notes, is "well over half the median annual income in U.S. households." Hold on: just wait a second before you start rolling your eyes. It's easy to say, "These people should just realize a wedding is about having a special day, not about putting yourselves in crippling debt."

But guess what? When it's your wedding, you're going to want everything to be perfect. Yes, you. So will I. It'll be your special day, so why not spend some extra money to get the extra-long roses or the filet mignon?

My point isn't to judge people for having expensive weddings. Quite the opposite: The very same people who spend $28,000 on their weddings are the ones who, a few years earlier, said the same thing you're saying right now: "I just want a simple wedding." And yet, little by little, they spend more than they had planned — more than they can afford — on their special day.

So what should we do?

Knowing the astonishingly high costs of weddings, what can we do?

There are three choices:

1. Be realistic. Even though you're reading personal-finance blogs like iwillteachyoutoberich and SavvySugar and are probably better at your finances than 99% of other people, you're still human. Your wedding (and mine) will be more expensive than we plan. The head-in-the-sand approach, however, is the worst thing we can do. Sit down and make a realistic budget of how much your big purchases will cost you in the next ten years. Do it on a napkin — it doesn't have to be perfect! Just spend 20 minutes and see what you come up with.

2. Set up an automatic savings plan. Since the last recommendation to make a budget was completely unrealistic and almost nobody will do it, I suggest just taking a shortcut and setting up an automatic savings plan. Assume you'll spend $25,000 on your wedding, $20,000 on a car, and (however much) on a down payment for a house. Do what you can per month. Can you afford $300? If so, that's $300 better than you were doing yesterday. Now that you've read this, your preparation — or debt — is a choice.

3. You can't have the best of everything, so use the P word. Prioritization is such an important concept. We simply can't have the best of everything. Do you want the better food or an open bar at your wedding? If you have the costs on paper, you'll know exactly which trade-offs you can make to keep within your budget. If you haven't written anything down, there will appear to be no trade-offs necessary. And that's how people get into staggering amounts of debt. For the things you de-prioritize, beg, borrow, and steal to save money: Use a public park instead of a ballroom, ask your baker friend to make the cake, and ask relatives to help with cleanup. This is where, if you plan ahead, time can take the place of money.

Ideally, you do No. 1 (simplify) and No. 3 (plan). But even if you can't simplify, at least you can plan.

The result — and what to do today

Today, sit down and plan out the major purchases you'll have in the next ten years — whether or not you're engaged or have any plans to buy a house soon. This is really important: Planning before you need to separates rich people from everyone else. Plan out how much you'll reasonably need. Plan out how much you can save. Then go into your savings account and set up an automatic deposit plan. (I use ING Direct — set up an ING account in about 15 minutes.) Starting tomorrow, your savings account should have virtual buckets of money for upcoming items (e.g., 30 percent for your down payment, 25 percent for your wedding…).

The result: A wedding where you know all the costs and prioritize for what's important for you. A wedding where, the day after, you're debt-free and can start your lives together. And the ability to control your spending, instead of having it control you. Now you're one step closer to marital bliss.

Thanks for reading. If you're interested in learning how to spend extravagantly on the things you love — like a dream wedding — I've put together a 6-week program in my book, I Will Teach You To Be Rich. Get the first chapter free and learn credit card tips to negotiate your rate, waive fees, and payoff debt quickly and easily.

Image Source: Thinkstock
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