It’s a tough dilemma when you’re excited to start your life together as a couple, but your dreams are bigger than your budget.
If you can’t afford the dream wedding and the dream home, which do you choose? And how will your decision impact other financial decisions you’ll have to make with your spouse-to-be?
You might not be thinking about the long-term just yet, especially with the marriage versus mortgage debate on your mind, but it’s all connected. Having kids, travelling, starting a business, retiring—whatever your goals are, you want to be able to accomplish them. Thinking about where you’ll need money in the future can help you sort out where to spend your money now.
You’ve envisioned your special day for ages and you want a big celebration with everything you’ve saved on your Pinterest board. That’s fair, but consider that the average wedding in Canada costs between $22,000 and $30,000. That is a large chunk of money to spend on one day, without much—or any—financial return.
This is a heart-versus-head thing, we know. It’s not about financial return, it’s about a once-in-a-lifetime celebration with friends and family and the start of one of the most important commitments you’ll make in this lifetime.
So, you spend the money and you have the wedding that is everything you dreamed of and more. What happens after the wedding? If purchasing a home is the next goal you hope to accomplish, you’re back at square one when it comes to saving.
That’s not to say a wedding isn’t worthwhile. If it’s up there on your life list, absolutely have the wedding—but understand the ripple effect that spending your savings could have on those other goals further down the list. Or, scale it down, if possible. Find a venue that’s low or even no cost. Keep the guest list to your inner circle. Stick to the essentials—if you can’t do without the dress, maybe you could do without the save-the-date cards or the limo. Every little bit you save counts towards the next goal.
The cost of housing is on the rise, with the Canadian Real Estate Association reporting that the average house price in Canada will reach $620,000 this year. Mortgage rates are also at a record low, though rates are expected to rise soon.
Is it worth redirecting your wedding savings into a down payment for a house? It could be, if the trajectory we’re on continues. A 5% down payment on a $620,000 house is $31,000—just above the average cost of a wedding. In two or five or 10 years, that number could look completely different.
Then again, low interest rates have brought buyers out in droves and left sellers with multiple options. Even with your savings, it could take some time to find, bid on and buy the right property.
There are pros and cons no matter which option you choose, which is why it’s beneficial to look at the whole picture. When you and your partner have the same priorities and get your finances in order at the very beginning, you can avoid the relationship trap that so many fall into—the money fight. Money is the main thing couples clash about and the main reason relationships fail, according to a BMO study.
A financial planner can help you put your dreams into perspective and give you practical advice based on your short- and long-term goals — think of it as financial relationship counselling. So before you hire a wedding planner or a real estate agent, you might want to sit down with a financial advisor. It’s free to connect with one on Vexxit. With a little know-how, you and your partner can start your life together on the right financial path, or at least come up with a plan to get there.