Andy Gregory, financial adviser here at Fingerprint Financial Planning, got married recently. Andy and Stephanie began their married life together on 9 July 2022 and we’d like to wish them a huge congratulations from the whole Fingerprint team!
Marriage is a lifelong promise and a huge financial commitment.
We’re currently at the height of the UK’s wedding season. As nervous couples look to the skies with their fingers crossed for sunshine this summer, they’ll be forking out an average of £20,000 for their big day.
This figure, published by Compare Wedding Insurance, is for weddings taking place in 2021 and 2022. It marks the peak in a trend that has seen costs rising consistently since 2012 when average costs stood at just £11,441.
These figures exclude the cost of the honeymoon, meaning that this year’s £20,000 price tag is likely to be below the actual final cost.
But with the UK in the grips of a cost of living crisis, if you or your loved ones are getting married in the next few years, how much could the costs rise, and where will the money come from?
Keep reading to find out how to factor wedding finances into your long-term financial plans.
There are simple financial steps you can take if you are planning to get married
With the average cost of a wedding high, and rising, incorporating your special day into a financial plan is crucial. You’ll need to:
1. Start saving as early as possible
With inflation at a 40-year high currently, millions of UK households are struggling to find disposable cash.
If you’re planning for a wedding though, you’ll hopefully have some money set aside already. If not, start now!
If you haven’t got any money set aside yet, you’ll need to think about when you plan to marry.
In the current low interest rate and high inflation climate, cash savings are effectively losing value in real terms. Investments, on the other hand, offer a greater possibility for inflation-beating returns. But investment is a long-term strategy and there are risks attached.
Begin by taking a closer look at your household budget. Work out where savings can be made to increase your disposable income and then put this aside at the start of the month before budgeting with the rest.
However, be sure not to lower or cancel contributions to your future financial security, like pensions or life insurance. Looking after your future self remains key.
Speaking to an expert could help you decide on the best course of action based on your current funds, attitude to risk, and time frame.
2. Pick a budget and stick to it
You’ll have an idea of the type of wedding you want, and that might come with a ballpark figure attached.
Once you’ve thought about your level of household income, capacity to save, and timescales, you’ll need to think about a realistic budget.
If you’ve started from scratch, how much is it reasonable to save in the time you have? If you plan to dip into other savings and investments, you’ll need to think carefully about your long-term plans, and where your wedding day fits into those.
You might have ISA savings or money held in a cash savings account. Maybe you are saving for a house or building a fund to supplement your income in retirement. You’ll need to ask yourself how much of a dent are you willing to make in these plans.
Most importantly, once you decide on a budget, stick to it. It will always be tempting to spend just that little bit more, but don’t rule out the need for compromise.
While this might not fit with your vision of an ideal wedding, overspending now could have huge consequences for your long-term plans, and your financial security later in life.
3. If the Bank of Mum and Dad is helping out, be sure you understand the terms
Whether you are looking to the Bank of Mum and Dad for help, or you are the Bank of Mum and Dad, frank discussion from the outset is vital.
According to wedding magazine Hitched, parents paid 60% of the total wedding costs in 2021. That amounts to £10,553, based on a 2021 average of £17,300.
As a parent, HMRC rules allow a tax-free gift to be made up to £5,000. That’s £10,000 for two-parent families. Wedding gifts can be made on top of the annual exemption too, which currently stands at £3,000.
This could allow parents to give a significant sum of money tax-free as a gift, but each party must understand whether the money is a gift or a loan.
Talk openly and honestly about the wedding budget, and gift expectations. If a loan is needed, speak to the professionals, and get a proper loan agreement in place.
While this might seem unnecessary, large borrowing linked to a marriage – and later a family home – can quickly become messy without the necessary protections in place.
Get in touch
As with any life milestone, marriage is the perfect time to seek financial advice.
If you would like help to make financial plans for a wedding, or you have any questions about your future financial security, speak to us now. Get in touch by emailing email@example.com or calling 03452 100 100.