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Funding A Wedding: Using Savings vs. Using A Loan

Katie Francis

Katie Francis

September 20, 20216 minute read
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Weddings usually top the list of the most expensive events in a person’s life. Whether you’re picturing a small family gathering in your backyard, or an overseas extravaganza with all the bells and whistles, you’ll likely run into hidden or unexpected costs.

On this page:

    To make sure your big day is as special as possible, it’s important to first decide how you plan on funding it. Have you been saving for years for your fairytale wedding, or are you planning on maxing out the credit cards? Or, are you considering taking out a wedding loan to ease the financial stress and focus on planning?

    Our guide to funding your dream wedding aims to clear the air when it comes to your financial choices for the big day. After all, your memories of the wedding should be surrounded by love – not debt!

    How much do weddings actually cost?

    Wondering how much couples actually spend on their big day? According to MoneySmart, the average Aussie couple spends $36,000 on their wedding. While costs can fluctuate dramatically depending on the scale of your wedding, some of the common expenses to consider include the:

    • Venue (sometimes multiple depending on ceremony and reception);
    • Food, drink, and catering costs;
    • Professional photography;
    • Entertainment costs;
    • Floral arrangements and decorations;
    • Clothing and accessories (wedding dress, suits, jewellery);
    • Beauty (hair, makeup, spray tans, manicures);
    • Accommodation for the wedding party (if necessary).

    How to set an achievable wedding budget

    Setting a realistic budget for your wedding is the first step to being in control of your finances. You might have been dreaming of a ceremony that rivals Kate and Will’s, but can your wallet bear the brunt? It’s important to understand that no matter how you plan on financing your wedding, it needs to fall within your financial means.

    Most Aussie couples allocate roughly $25,000 for their dream wedding when they begin planning. Unsurprisingly, most end up going $10,000+ over budget. This is because many fail to factor in additional costs that are more than likely to pop up throughout the planning process. While finding yourself in need of some extra cash when planning might not be the end of the world, having a realistic budget that you can stick to will alleviate a lot of stress.

    Is there a particular venue you’ve had your heart set on? Does your partner want a highly sought-after wedding band that’s booked out months in advance? Are you planning on having dessert tables as well as a wedding cake? Try writing down all of your expectations around the big day and make it as precise as possible. Then, you can start to research how much a certain caterer would cost, and the price of hiring that old-fashioned car that you’ve always loved. Once you’ve managed to come up with a rough estimate of each of these costs, you can start looking at the big-picture.

    If you can’t justify spending thousands on an extra course during the reception, then don’t. Thanks to social media, weddings continue to become more extravagant these days, and many find themselves overwhelmed with all of the ‘must-haves’.

    At the end of the day, whether you have three outfit changes or stick to the one dress, your wedding is about celebrating love with family and friends. So, don’t spend every penny on planning for a wedding that you don’t need. Instead, be smart with your budgeting and make sure the aspects that you and your partner value are prioritised.

    There are plenty of great resources out there to plan your wedding budget. The MoneySmart wedding budget planner template lets you factor in both you and your partner’s expenses and spending to see how much you can realistically save before the big day.

    What is a wedding loan?

    A wedding loan is a type of personal loan. If you’re approved for a wedding loan, you can put it towards any aspect of the wedding planning that you like.

    Whether you’re wanting it to cover venue and catering costs, or the more personal expenses of your wedding dress and makeup, a loan can take the stress out of paying a lump sum upfront. It can also allow you to have manageable repayments over a selected loan term.

    For some couples, a wedding loan is the only option when it comes to financing their big day.

    Relationships Australia tells us that the vast majority of Aussies see financial stress as a reason for breaking up, and with the heightened emotions that come with wedding planning, financial stress is definitely something you want to avoid.

    If relying on savings won’t cover the costs of your wedding, then a wedding loan might be the best option for you.

    While most personal loans will incur interest and possibly additional fees and charges, they can be helpful in funding a special event like a wedding for those who don’t have enough savings. They can also be useful for couples who might have enough savings but aren’t wanting to spend this on their wedding.

    If you’re considering applying for a wedding loan, check out Jacaranda Finance’s wedding loan calculator to get an estimate of a repayment plan and see if it suits your budget.

    Advantages and disadvantages of a wedding loan:

    Advantages Disadvantages
    • Repayments can be broken down into smaller, more manageable chunks;
    • Flexibility with loan repayment terms;
    • Potentially lower interest rates on personal loans rather than using a credit card for wedding payments;
    • Ability to consolidate your wedding debt, if you use the loan to cover multiple expenses through different vendors.
    • Interest rates, establishment fees, and other charges (where applicable) can mean you end up paying more money in the long run;
    • Entering into your marriage with a potentially high amount of debt (leading to financial stress);
    • Extensive fees and charges if you default on your loan.

    Things to consider before applying for a wedding loan:

    • Do my partner and I have a complete understanding of our wedding costs and finances?
    • Will my partner and I be able to make repayments without financial hardship?
    • Will the loan have a safeguard for repayments if my partner and/or I lose our source of income?

    Using savings to fund your wedding

    Some couples may have a sizable chunk of savings put aside to cover the costs of their wedding. Whether they’ve been saving for years or been lucky enough to receive money from the family bank (i.e. parents), the knowledge of having a strong financial backing when planning your wedding is more than desirable.

    Many couples also opt for a longer engagement period in order to have more time to save. While forking out tens of thousands of dollars from your hard-earned savings account may seem daunting, it can make things a lot easier in the long run.

    Advantages and disadvantages of using savings:

    Advantages Disadvantages
    • Expenses are paid upfront, leaving you debt-free;
    • No interest fees are applicable;
    • Guaranteed costs upfront rather than a higher repayment period.
    • Potentially losing the financial security net of your savings if you need money after the wedding.

    So, how do I choose between savings and a loan?

    While both payment options have their pros and cons, it definitely depends on your individual financial situation.

    Couples who are comfortable financially and don’t want the fuss of a loan may prefer paying upfront, whereas younger couples who might not have an established savings plan might need to go down the path of a loan.

    Some couples will go down the path of both savings and a loan. By choosing a few financial options to cover costs, couples can benefit from the financial security of a savings plan while also having a stress-free planning process. No matter how you choose to fund your wedding, though, the most important thing is that you and your partner have a wonderful day!

    Want to learn more?

    If you’re considering a destination wedding, or possibly an elopement, check out our articles on these topics to find out more. Plus, if you’re wanting to be savvy and minimise wedding expenses, give our article on money-savings tips for your wedding a read.

    Copyright © www.jacarandafinance.com.au Jacaranda Finance Pty Ltd ® ABN 53 162 078 195 Australian Credit Licence 456 404, Pawnbroking License Number 4221738. The information on this web-page is general information and does not take into account your objectives, financial situation or needs. Information provided on this website is general in nature and does not constitute financial advice.

    Katie Francis
    Katie Francis

    Written by Katie Francis

    Katie Francis is a Content Writer at Jacaranda Finance. She is currently studying a Bachelor of Business (Marketing)/Media & Communications at the Queensland University of Technology.

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