So you’re about to watch your child make one of the biggest decisions of their lives. Congratulations — you’ve probably dreamed of your child’s wedding day for almost as long as they have. This can be one of the happiest and most rewarding times of your parenting journey, but it can also be wrought with financial burden.
It’s a longstanding tradition that the bride’s parents pay for the wedding. Even if you and your child aren’t big into traditions, it’s common for parents of both the bride and groom to feel compelled to support their child by paying for some costs of the wedding. This can raise many financial questions for parents, especially if they are approaching retirement and already grappling with how best to manage their finances. It’s common for many parents to wonder if it’s worth taking out a loan to help their child with their wedding. Here’s how to decide.
How common is wedding debt?
Because the pandemic uprooted many wedding plans, the average cost of a wedding in 2019 (not 2020) is probably more accurate to look at when determining the possible cost of your child’s wedding. In 2019, the average wedding rang up a bill of $28,000. According to national data, wedding expenses are the reason why people take out personal loans at least 5.4% of the time in the United States. But depending on where you live in the country, that number can be significantly higher. In New York, personal loans were used for wedding expenses as much as 7.7% of the time.
It’s clear that people are going into debt to afford weddings. The question is — is this the right choice for you when it comes to supporting your child?
Questions to consider before getting a wedding loan
If you’re thinking about paying for your child’s wedding with borrowed money, evaluate your decision by asking yourself these questions.
1. Can I afford the monthly payments?
The cost of monthly payments should always be at the forefront of your mind when deciding on whether or not to get a loan, but particularly if you are nearing retirement and expect to be on a fixed income during the lifetime of the loan. If you take out a loan with a seven-year term but plan to retire in five years, you’ll have two years of payments to cover using your retirement income or savings.
Using the $28,000 average cost of a 2019 wedding as our example, if you took out a loan in that amount at 6% interest on a seven-year term, you’ll pay $409.04 each month. You should have more than this amount left over in your monthly budget in order to afford this loan.
2. Should I limit my contributions?
There could be many reasons you might want to limit your financial contributions to your child’s wedding, including your own values or even your child’s wishes. Before signing for a loan that will cover the cost of the wedding, have an open discussion with your child about how much you are willing to contribute. This can also help you draw a boundary in case the wedding goes over budget. Keep in mind that even though the number of marriages decreased in 2020, that’s likely due to the pandemic. Expect to see pent-up demand for wedding venues following the pandemic, which could easily push costs higher and cause your child’s wedding to exceed its initial budget.
3. Will this impact my retirement?
In 2017, statistics show 42% of brides passed wedding costs along to their parents. If your retirement plans are already in motion and you’re suddenly facing the prospect of paying for a wedding, consider how the added cost of a new loan could impact your plans. Not only could an added loan payment mean you might delay retirement, but it could also impact your lifestyle choices. If you planned to buy a second home in retirement, for example, having the additional debt in your name might impede your mortgage approval. Consider that overspending toward the end of your career could also mean that your child has to help with some of your expenses in retirement. You’ll want to seriously consider if this tradeoff is worth it.
4. Can I save money in advance?
Maybe you can sense a wedding in the future, but you know you have some time before your child moves forward with their plans for the big day. In that case, are you able to save any money now to prevent or reduce the cost of a wedding loan in the future? Preparing for an upcoming wedding by creating a fund that accrues some interest could significantly reduce the amount of debt you feel compelled to take on.
There can be a lot of financial pressure surrounding weddings for parents of the happy couple. But before you sign on the dotted line for a wedding loan to cover the costs, consider all of your options. Setting limits on your child’s spending and protecting your current finances, as well as your retirement, can help keep your finances in check.
Jolene Latimer has her master's in Specialized Journalism from the University of Southern California. She writes about personal finance, marketing and sports.
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