It’s usually a very exciting time in a parent’s life to learn of a child’s engagement. Rest assured that before the news has a chance to set in, focus will quickly turn towards planning for the wedding. Here are some things for parents (and the happy couple) to think about before the “Big Day”.
- Wedding Budget - Regardless of who is paying for the wedding, starting with a budget and planning backwards will help keep costs in line. The average cost of a wedding in 2018 was approximately $34,0001. Choosing a wedding planner is one way to potentially save time and money. An experienced wedding planner can navigate details of the event planning and provide valuable advice to stay on budget. The added cost for a wedding planner can pay for itself with potential savings they might negotiate through relationships with vendors or unnecessary expenditures they can help you avoid.
- Personal Experience - Sharing personal experiences from your own wedding may help ease the anxiety a child might be feeling about their wedding. Advice on buying home or managing household expenses can be a valuable resource to a newly engaged couple who might have these things top of mind. Especially coming from a family member with who they have a close relationship.
- Creating A Financial Union - Our personal perspectives on money and finance are shaped by how we were raised for the most part. Couples need to be careful about carrying their past financial experiences to the new “household”, but focus on creating a shared philosophy about money. To create a more harmonious financial “union”, couples should consider discussing these topics in advance:
- Shared Financial Goals: Do they want to own a home? Have children? What are their feelings about public vs. private school?
- Attitudes About Money: What will their “family” philosophy be about money? How did their parents handle it?
- What Debts Are They Carrying: How will the couple manage this debt? It’s best at this time to lay all cards on the table and devise a plan if debt needs to be paid off.
- What Will Each Partner’s Role Be? Deciding who is going to the pay the bills and what accounts they will be paid out of is part of managing your finances jointly as a couple. While it sounds simple, this can be a challenge for those couples that had previously managed these things separately or are doing it for the first time. Also, don’t forget to let your creditors know of any name or address changes.
- Where to live: Should we stay close to family? Does it make sense to buy or rent a home?
- Setting Up A Household Budget - Couples starting out might find it helpful to draft a household budget. If they decide to co-mingle income and expenses, their financial picture will look different than it did when they were single. Tracking your expenses is the first step in creating a household budget. Start by listing housing expenses which might include a mortgage payment or rent, insurance, property taxes, utilities and repairs and maintenance. As a general rule of thumb, these should account for no more than 40% or gross income. From there, start listing other expenses such as food, clothing, transportation, entertainment etc. Left over money can be used to fund some of your short or long-term savings goals.
- Tax Filing Status - Make a decision on what status to file state and federal tax returns under. Most will choose married filing jointly but there are some instances where married filing separately might save you money on taxes. For example, a spouse that has incurred large medical expenses or property damages might benefit more under a married filing separately election.
Getting married is a major life event for not only the newlyweds, but their families as well. Parents play and important role providing support and guidance during a time that can be overwhelming and filled with sudden changes. It’s a special moment to see your child starting this new chapter in their life. Enjoy the experience!
1 www.nerdwallet.com “How Much Does a Wedding Cost?”
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations to any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.