What to Do with Wedding Day Cash
The average cost of a wedding climbed to a record high of $35,329 in 2016. That’s up 8% from the 2015 average. Couples spent an average of $245 per wedding guest in 2016, up from $194 seven years ago.
The national average cash gift amount in 2016 was $160 ($190 in IL). So, help start your marriage off on the right foot by sitting down with your spouse to build a plan around what you will do with your wedding day cash. Money can cause an enormous amount of stress in a marriage, so having a financial plan can help eliminate some of that. Here are some tips on what to do with these cash gifts.
1. Pay off your Debt – Did you pay for wedding expenses with a credit card? Establish a plan to reduce this high interest debt. Do you have other high interest credit card debt? Determine which debts you will pay off first and build a plan around that. Once all your debt is paid off, begin putting the funds you were using to pay off the debt towards some of your other goals such as establishing an emergency fund.
2. Establish Your Emergency Fund –Everyone should establish an emergency fund for those unexpected expenses that can easily drain your bank account such as an expensive car repair. Having an emergency fund of cash available will position your family to come out on top should this happen. Many times when emergencies happen, people rely on credit which ends up costing more money in the end. Your emergency fund should represent 3-6 months of household living expenses and should be placed in a high interest earning savings account or money market account.
3. Save for Retirement –If you and your spouse are not already doing so, you should begin saving for retirement immediately. Individual Retirement Accounts (IRA’s) can be started with as little as $1,000 and you can set up your account so money is deducted from your checking account each month.
4. Protect Yourself with Life Insurance –A sudden loss of income through a death can be a huge financial burden on your family. Life insurance can be used to pay off debts, the mortgage, final expenses, medical bills, college for your future or current children, and more. There are many tools and resources available to help you determine what policy will work best for your family.
5. Enjoy–There certainly isn’t anything wrong with spending some of your wedding day cash on yourself. Just be sure to be smart in choosing what to spend your money on. For example, if you like to travel and that is important to you as a couple, consider tucking some of the money away for your next trip. If you need new furniture, use some of your cash to make that purchase instead of purchasing it with a credit card.