How to Save For a Home While Planning a Wedding
Planning a wedding while saving for a home deposit is no mean feat, but it can be done. Nila Sweeney, managing editor of Propertymarketinsider.com.au explains.
So you want to get married and buy a home. Congratulations! Not many people dare to go through two of life’s biggest and most expensive milestones at the same time.
Are you crazy for even entertaining the idea? Perhaps. But don’t let the opinions of other people stop you from pursuing your dream. Some people have successfully navigated this perilous journey before. So it can be done.
But should you do it? Before you dive in, it pays to do a bit of soul-searching and reality check.
How to have a wedding and buy a home
Here are some ways to crack the property market and still have the wedding of your dreams.
Figure out where you stand together financially.
This should be your number one task. Yes, it’s not the most romantic to talk about money, but it’s important that you’re on the same page when it comes to finances.
Ask yourselves what’s your long-term goal beyond the wedding. Does this include buying a house, travelling or starting a family? What are your priorities?
Once you have a clear idea about your financial goals as a couple, you can set your priorities.
Prioritise your savings goals.
Yes, you can save both for a wedding and still buy a home, but you can avoid a lot of distress by deciding which to prioritise with your savings plan.
While some couples can do both at the same time, choosing one goal and delay the other for a period of time would make it more manageable over the long run.
The key is for both of you to agree on which to save for first and be happy with your choice.
Remember that you’re not giving up on your dream in favour of the other. You’re simply getting one done ahead of the other important milestone.
Set up a solid financial plan
Whether you’re choosing to save for your wedding first or a deposit, you need a plan on how to get there.
A good way to start is figuring out how much you need to save. Then look at your existing finances.
A wedding, just like a home can be as expensive as you want it to be. So a prudent way to avoid overspending is to set a limit on how much you’re willing to spend on your wedding. Then work your way back.
To give you an idea, Australians spent an average of $36,200 for a wedding according to a study by IBIS World.
So say you budget $30,000 for your wedding.
Using ASIC’s moneysmart calculator:
- If you have existing savings of $5,000
- You plan to save $1,000 per month
- At 2% savings interest rate, you can reach your goal in 2 years 1 month or 25 months.
If you can manage to save more and for longer, you can significantly cut the time it takes you to save both for your wedding and for a home.
Ask your parents for help.
Parents and family can help you fast-track your savings either by paying some of the wedding expenses or by gifting you a deposit for a home.
Your parents could also offer to give you an interest-free loan to make up for the shortfall in your savings target.
If your parents or other relatives have offered financial help for either a wedding or a home purchase, make sure you’re clear about any conditions attached such as, are you expected to pay them back? By when and how much?
Set up a home purchase fund instead of traditional wedding gifts.
Ask your friends or relatives to contribute to your home purchase fund instead of a wedding gift. Most people would appreciate giving you what you want and need.
You can set this up as a joint account.
Watch your wedding spending.
According to the IBIS report, nearly half of couples (43%) end up blowing their wedding budgets.
It’s easy to get carried away. But remember that overspending on your wedding would have a dire consequences on your home buying fund. This is particularly true if you’re planning to buy shortly after the wedding.
If you’ve taken a personal loan to fund your wedding, you will find it more challenging to get a mortgage to buy a home due to your increased debt.
To keep your spending in check, make sure you create a solid wedding budget and stick to it, no matter how big is the temptation to overspend.
Reduce your wedding cost.
Don’t start your married life dead broke by overspending on your wedding. Here are some practical ways to cut your cost and still enjoy your big day.
Slash your guest list.
One of the best ways to save on wedding cost is to reduce the number of your guests. You don’t need 200 people to celebrate with you on your wedding day.
Be brutal in culling your list. Real friends will understand if you let them know why you’re keeping it smaller than planned.
Defer your honeymoon.
Postpone going on a honeymoon until you’ve bought your home. You have your life ahead of you. Waiting for a few months to buy your home is worth it in the end.
Ask your friends to shoot your wedding.
Wedding photography and videography are costly. While it’s tempting to get the best shooter to record your day, you can save a lot of money by enlisting some of your friends to donate their time or at least give you a discount.
Ask your friends or relatives to make the cake for you.
Wedding cakes are expensive. You could save a few hundreds of dollars by getting someone to donate a wedding cake for you.
These are just a few ideas on how to save for a wedding and your first home.
As always, the key is to start sooner and be consistent. Before you know it, saving becomes a habit.
Managing Editor of Property Market Insider and a former editor of Your Investment Property Magazine.
Published: 11 October 2017.