Note: This topic is about discouraging spending lavishly on wedding celebrations, not discouraging having a decent wedding.
Wedding celebrations, to many first time grooms and brides, is a once in a lifetime event which they wanted to be memorable. The bride wishes to be the princess of that day and to show off how well she married. The groom wants to show to the others how well-off he is and to be able to satisfy the love of his life. Whether to show off or to simply live the dream, many couples spent more money on their weddings than they can afford.
Entire life savings, borrowings from family and friends, loans from banks or financial institutions all into one single event that lasted a few hours.
Actual news article here.
While there is no wrong in wanting to live the dream (who doesn’t?), and no wrong to actually wanting to show off, the financial consequences of spending beyond your means are severe. Let us make some common assumptions and analyse the situation should a pair of average couple plans an expensive wedding.
In Singapore, Malaysia, China and other Asian countries, the guests of the wedding ceremony (which consists of a wedding dinner) will typically give a monetary gift in the form of red packet (for Chinese) or green packets (for Malays).
In Singapore for example, guests will try to cover back the cost of the dinner, ie I pay for my meal. If a table of 10 guests in a wedding banquet cost $1200, then each seat will cost $120. Depending how many people are invited as a unit (single person, couple, family unit), their monetary gift will try to match the cost of them being there. Yet, realistically speaking, that generally applies when the guest’s unit is a single person or at most a couple. If you invite a family unit of 5 people, I do not think you should expect to be given a monetary gift of $600. Afterall, in Asian society, attending multiple wedding dinners in a year is a common sight. In Singapore, you should expect to lose about 20% of the cost when you host a wedding banquet. That is because there will be some other costs beyond the dinner, such as photographers, decoration etc.
Singaporeans are in fact so concerned about paying the right amount that there is a market rate to benchmark your monetary gifts against.
I do not know much about the Western culture, but I guess if gifts (monetary or not) is also part of the culture, I supposed it is also safe to assume that an average wedding will also incur some kind of financial cost after netting off the value of the gifts.
Now, let’s say we go for an extravagant wedding ceremony. From the same news article above we have:
It does not take a genius to tell you that people will simply NOT match their monetary gifts to what you spend on the wedding. I am here at the wedding to give you my well-wishes and blessings, not to sponsor your lavish wedding when I have my own debts to settle and financial goals to reach.
Let us then assume a $50,000 debt incurred from the lavish wedding, which to many people, is more than a year’s worth of their income. Of course, now that you have a spouse to share your burden, we shall assume that a $50,000 debt is worth 6 months of their income. Does it mean that they will only take 6 months to pay it off? Absolutely not. Who on Earth does not need to eat, drink, put some clothes over him, or to have a roof over his head?
Let us assume that now every month, they are able to scrimp and save $1000 each after deducting off things like food, transport, housing mortgage or rental, housing renovation and furniture purchase (if you buy a house), miscellaneous fees such as the trip to the doctor, the insurance or the taxes they have to pay. If their salary is actually $50,000 a year, saving $1000 a month each in times of setting a new family unit is actually pretty awesome. Now as a family unit they save $2000 a month, which will take them 25 months to pay off their debt.
But credit card companies and financial institutions are not charities. They charge interests on the debt people owe. Investopedia tracked and found out that the average interest rates of credit cards is 19.62%. In Singapore, the interest rate is 24%.
This means that while you are paying for your debt’s instalment, you will also need to come up with about 20% extra to pay off the interests. This will bring your debt up to about $60,000, or about 30 months worth of savings. Now, beyond that of the monetary aspect, your marital life may also take a hit. Will you have the additional resources for kids? Will you have the extra resources for your usual social gathering or romantic dates with each other? Will the toll of scrimping and saving for extended periods of time affect your newly married life? These are all legitimate issues which couples in debt face.
My Personal Experience
I did not have a wedding celebration, only a simple tea ceremony involving both our parents. None of our relatives were invited. Personally, we did not like all the fanfare. We are low profile people who just want to quietly live our lives. Financially, we have both agreed that wedding celebrations are a waste of money. Rather than spending to please others, we spend to enjoy ourselves. We flew to Paris for our wedding photo shoot, and had our honeymoon in France and Switzerland. With the rest of the money we had, we used it to grow our assets. Not spending on wedding celebrations does not mean we do not spend on our own private celebration and enjoyment.
Of course, my case is more of an extreme one, or an outlier case. Many people would go for a wedding celebration and a honeymoon. Nothing wrong with that. As long as you are spending the honest money you earned yourself, within your means, by all means it is proper to get a celebration and a good memory for your new chapter in life.
As an additional point, instead of buying a diamond ring, I bought a watch (timepiece, if you would like to call it) for my wife. She is also someone who is logical enough to know that spending money on a ring with a stone on it is not very smart. That is not to say you should not ask for a diamond ring though. Everyone is entitled to their whims every now and then. That behind said, I have friends who wanted to skip the diamond ring. Some had rings with other jewels, such as sapphire (honestly I forgot the exact stone). Some replaced the rings with a watch, like me.
Have a proper and decent wedding celebration, not a lavish one beyond your means. Afterall, you are starting a new family. Family building requires resources, and the snowball of wealth takes time, effort, discipline, sacrifice and persistence to grow.
Towards your road to financial freedom, it is important to weigh each of the major financial decisions in your life. Having $50,000 in savings in your 20s is very different from having $50,000 in savings when you are 90. In your struggle towards financial freedom, do not forget to enjoy life, for you are not a robot. While enjoying life, do not forget you may very well still have many more years to go, and that the strive towards financial freedom will almost certainly bring great rewards.