Article Wedding costs: 3 ways to help pay

Is your adult child is tying the knot? Learn why financial planning is essential for their big day.

Weddings bring families together in wonderful ways and set the stage for a couple’s new life together. But how much, approximately, should that stage cost? Even better questions include: Who should pay for it, and how should they pay for it?

The cost of the average wedding dropped slightly, from $35,329 in 2016 to $33,391 in 2017, according to The Knot 2017 Real Weddings Study, which polled 13,000 US couples.1 And The Knot’s 2017 LGBTQ Weddings Study showed a lower cost for same-sex couples, with an average cost for men of $18,049 and $17,341 for women.2

Couples might be spending less overall, but they are spending more per guest than ever before ($268 per guest, on average) and being more creative with personalization and amenities, The Knot Real Weddings Study found.

Funding a wedding is no longer just the territory of the bride’s family. Number one, there may not be a bride. And number two, these days wedding bills are often shared among both families—and with couples waiting longer to get married, adult children are more likely in a better position to contribute.

There is also a rather obvious third reason: Does it actually make financial sense to spend that much on one day? “Debt is often due to emotional decisions—and what’s more emotional than getting married?,” asks Justin Waring, Investment Strategist with UBS. Can you help your child have the special day they want, avoid incurring debt and send a subtle (or not so subtle) message about saving for the future? We have three strategies that might help.

Strategy #1: give a gift

The 2018 annual gift tax exclusion is $15,000, which means that each parent can gift $15,000 to each partner without beginning to eat into their lifetime tax exclusion amount ($11.18 million). That means each set of parents could theoretically gift $60,000 to the happy couple—or spend on wedding expenses, since (for tax purposes) paying for costs like the band or the venue could count as a gift.

Some parents simply write a check and tell the couple they can use the money however they want—for a wedding, a down payment, savings or some combination of the three. It’s a good way to put an upper limit on the cost, make your adult child feel like they have more autonomy, and perhaps make them think more rationally about how to allocate the funds, says Ainsley Carbone, Total Wealth Strategist for UBS.

“Better than giving cash is to give them appreciated securities,” Waring says. If you haven’t paid capital gains on your share of stock or a fund, you can gift that to a child and you won’t be on the hook for capital gains taxes—they will be (eventually, when they sell it). “Giving investments subtly encourages them to think long term and begin building their nest egg,” he says. Though it may not seem as exciting as paying for a dove release, giving your child a jump on retirement savings is one of the best gifts you can give—especially because money troubles can be one of the biggest strains on a marriage.

Strategy #2: save the old-fashioned way

Open a savings account specifically earmarked for the wedding, and save a little bit at a time. While there aren’t necessarily tax benefits to saving this way, there is a psychological benefit. “Setting aside an account for a big expense takes advantage of a behavioral bias called ‘mental accounting’ and can help us to be more serious about meeting savings goals,” Waring says. One strategy is to use direct deposit to make sure that a portion of your paycheck automatically goes into the account, which can also help you resist the urge to spend those funds elsewhere.

Strategy #3: strike a bargain

These days, couples are interested in specialized amenities and personalized guest experiences, which can greatly increase a wedding bill. Help your children prioritize what experiences are most important, and offer to fund one particular element—like a really great wedding band. Carbone has a piece of advice if you’re taking this approach: “Make sure you’re aware of the costs, because it’s easy to get sticker shock if you aren’t familiar with the going rates for certain things. Instead of offering to cover an entire expense, considering saying, ‘I’ll cover this up to a certain amount.’”

Weddings are fun, memorable and special, and parents want to be part of creating an extraordinary day. Stay balanced in how you think about it, though, Waring stresses, noting that the typical wedding price tag of $33,000, invested around the age of 25, would be close to half-a-million dollars by the time the couple enters retirement. “It's much better to focus your children on building their retirement nest egg versus what is, objectively, a party.”