Given half of marriages eventually end in a divorce and wedding ceremonies last for at most 12 hours in America, it’s wise to spend as little as possible just in case things don’t work out.
Despite such pure logic, the average cost in America is around $33,000 according to The Knot’s 2020 Wedding Survey. If you live in Manhattan, the average spend is closer to $77,000. In comparison, San Francisco weddings only cost $39,329.
With the median household income in America at around $60,000 according to the US Census Bureau, what is going on with couples who are willing to spend roughly 70% of their annual after-tax income on such ephemeral pleasure?
Here are some random responses I’ve received from couples who have spent $33,000 or more on their weddings:
“I wanted a night we’d never forget.”
“The wedding is more for our family than it is for us. We both have huge extended families that must all be invited.”
“Everything from the venue to the flowers cost so much nowadays. It’s hard to spend less.”
“I already spent $18,000 on a ring. What’s another $50,000 spread among 200 people?”
“I didn’t want to spend $200,000 on the wedding, my wife did. I hate weddings and would rather have just gone to City Hall for a couple hundred bucks. It’s all curated and fake for thirsty Instagram users.”
New Wedding Spending Rules To Follow
Given I came up with engagement buying rules thousands of love birds have followed since 2010, it’s only appropriate I come up with wedding spending rules for financial freedom. Controlling wedding costs is arguably much more important than overspending on an engagement ring, because at least with the engagement ring, it can be reused (aghast!), resold or passed down.
I’m certain if you follow my wedding spending rules, your marriage will last longer and you’ll have more wealth than if you spend what the average American does on a wedding.
If for some reason your marriage ends before the average duration (eight years), or you end up having a lower household net worth for your age than the average, then you can simply blame each other for all your mistakes.
Here are my top wedding spending rules to follow.
1) Spend no more than 1% of your newly combined household income. If he makes $60,000 and she makes $80,000, then they should spend no more than $1,400 on a wedding. If their newly combined household income is $1,000,000, then they can ball out on a $10,000 wedding. Only when couples starts earning $3,000,000 or more should they come close to spending what the average American spends on a wedding.
As you can see from the chart below, the real median household income in America is about $60,000. We’ve just surpassed our 1999 highs. That’s almost 20 years of no income growth folks! Therefore, if the typical American follows my 1% rule, they should limit their wedding cost to roughly $600. Causal weddings in your backyard are not only intimate but cost effective.
2) Spend no more than 1% of the value of your combined pre-tax retirement plans. Let’s say at age 30, she has a Financial Samurai-recommended $150,000 in her 401(k), and at 35, he has a Financial Samurai-recommended $300,000 in his 401(k); this couple can spend up to $4,500 on a wedding.
By drawing the couple’s attention to their retirement savings plans, there will be a natural tendency to spend less given spending more means a later retirement. The more you hate your job, the less you will end up spending on a wedding as a result.
For more: Recommended 401(k) Savings By Age
3) Spend no more than 50% of your combined side-hustle gross income. Let’s say the couple has a combined W2 gross income of $120,000, but also makes $20,000 selling t-shirts and trinkets online. The couple can now spend up to $10,000 on their wedding. They won’t, because everybody who side hustles knows how exhausting it can be to make extra income outside of their day job. But they can because they are so far ahead of everyone else who relies on only one source of income to survive.
4) Spend no more than 10% of your annual passive income. Side-hustle income requires work. Passive income, on the other hand, requires little-to-no work at all once the investments are made. This is why everybody needs to focus on building their after-tax investment accounts for financial independence.
If the couple happens to save and invest aggressively for eight years to generate $30,000 in annual passive income, they’re free to spend $3,000 on a wedding. As a gut check, I’d be willing to spend up to $20,000 a year on a wedding based on my current passive income that took 19 years to build. But any more is a no go, no matter how much I care for my guests.
5) Spend no more than $1,000 per year you’ve known each other. If you guys started dating in college at 21 and decide to get married seven years later, you guys can spend up to $7,000 on a wedding. If you guys started off as work place friends at age 25, married other people, got divorced, and decided 20 years later you were always meant to be together, then spending up to $20,000 is more digestible.
When you’ve already gone through the ringer once, you presumably have a better idea of what you want with your superior earnings power in your early-40s. By then, you probably won’t want to spend $20,000 because you have less people to impress.
BONUS: Spend as much as your respective parents want to spend. If a couple is lucky enough to have wealthy parents who love them so much to cover all the costs of their wedding, then they should go right ahead and accept their generosity. If it turns out the newlyweds accepted their respective parents help in spite of the fact their parents are financially struggling, then the married couple will simply have to financially support their parents for the rest of their lives.
I’ve always taken the view that as adult children, we should actively try to give back to our parents, not take from our parents after they spent 18 years taking care of us. I’m not even two years into fatherhood and I’m already thinking about taking a vacation and going back to work. If my son doesn’t insist on being a man and paying for his own wedding, I’m going to send him this post and podcast. We’ll pay for an auxiliary expense.
Save Your Marriage By Spending Appropriately
You’re obviously free to spend more money on your marriage if you want to, especially if you’re rich. But spending $33,000 for a wedding is truly a ridiculous amount for the average American household who only earns about $60,000 a year.
If you annualize the cost of the wedding, the cost is $12,045,000 ($33,000 X 365 days)! And goodness forbid someone spills red wine on the bride’s couture wedding gown, a drunk friend gives a terrible speech, or thunderstorms wash out the outdoor venue.
If your wedding isn’t perfect, then you’re really going to be upset.
If you follow at least one of my wedding spending rules, you’ll be able to get your marriage off to a great financial start. Not only can you use the money saved to buy a house, pay your life insurance annual premium for the year, make your future child a 529 millionaire, or bolster up your respective retirement accounts, you’ll likely have much less money fights because you’ll have more of it.
As I review my wedding spending rules, my favorite is #2: spend no more than 1% of your combined pre-tax retirement accounts on a wedding Financial independence starts with saving, and the easiest thing everyone can do is max out their 401(k) and IRA. Based on this rule, the average responsible American couple should spend between $2,000 – $3,000 on their wedding.
What makes a great wedding is the presence of your friends and family. You don’t have to spend a small fortune trying to impress them because all they want to do is celebrate you.
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