How much would you pay to finance your dream day? According to Mintel, the average cost of a UK wedding is now around £20,000 – a bill that many couples pay themselves. The pressure of funding a wedding and a honeymoon can lead to stress and anxiety for many couples but with some careful planning, you can stop the costs spiralling out of control.
Even if you have a good idea of what you want for your big day, some costs may come as a surprise and there are likely to be unexpected items creeping onto your expenditure list
Setting a budget
When working out how much you want to spend on your wedding, it’s important to take into consideration other financial goals you may be working towards, such as buying a house, moving to a bigger property or saving to have children. It may be that you already have your dream wedding – and honeymoon – planned out but, in reality, you may not be able to afford everything that you want, which is why it’s a good idea to work out your budget and stick to it.
First, prioritise your spending; list everything you need to budget in order of importance and cost each item accordingly. To help keep track of this, you might want to consider using a wedding-budget planner. There are many tools available online or you can create your own using an Excel spreadsheet. Include different categories such as transport, rings, clothing, venue, music, photography, flowers, food and drink, and columns such as amount budgeted, total cost, difference, date it needs to be paid by, deposit, and balance due. If you can’t afford everything, adjust your list and not your budget. It’s natural for couples to change their mind about the budget during the wedding-planning process but, with an expenditure list, you can mark down any changes and keep an eye on your overall spend.
It’s likely that you won’t have organised a wedding before. Even if you have a good idea of what you want for your big day, some costs may come as a surprise and there are likely to be unexpected items creeping onto your expenditure list. It’s useful to be aware of some of the key costs so that you can budget accordingly. Your reception and venue is likely to be one of your biggest expenses – it takes up about a third of the average wedding budget – but there are plenty of ways to reduce the cost, for example by getting married in winter or on days other than Saturday.
The second-highest cost of a wedding is often the honeymoon. To help with this, you could ask guests to contribute to a honeymoon fund, or to buy vouchers or ‘experiences’ instead of a wedding present.
Wedding dresses can also be a major expense. Secondhand dresses and designer sample sales are becoming an increasingly popular way to reduce the cost of bridal wear.
Read our Financial tips from newlyweds for more ideas.
Getting your finances together
Before you start booking venues and buying dresses, work out what you can afford to spend, taking into consideration any financial contributions you may receive from either of your families.
Think about whether you are being as effective as you can be in the way you are saving your money. If you’ve been planning your wedding for a while and you’re saving a large amount over a long period of time, you might want to consider a fixed-term savings account to get the best rates of interest. Or if you started saving at the beginning of your engagement, you may find it more convenient to put your money in an instant-access cash ISA. That way, you can save up to £5,340 a year, tax free, and can withdraw money, without giving notice, as soon as you need to start paying for things. HSBC offers a range of savings accounts: click here for more information.
The value of tax benefits will depend on your individual circumstances, and tax-free limits and tax may change in the future.
If you need to borrow money to pay for the big day, you should first think seriously about how much you need. Ask yourself: can you afford the repayments? How long do you want to spend repaying them? Are you borrowing in the most cost-effective way?
Credit cards can be used to borrow money and repay the balance over time, but you may have to pay interest. The HSBC credit card offers a discount on holidays booked through the HSBC Travel Service, representative 16.9% APR variable, which could help with your honeymoon. Read more about the HSBC Credit Card here.
If you need to borrow a larger amount and you're looking for better rates, you may want to consider taking out a personal loan, representative 6.9% APR. For more information, click here.
You may also want to think about arranging an overdraft. This can act as a ‘buffer’ in case you go over budget and can provide you with peace of mind when lots of payments are going out of your account. Overdrafts are not normally free, and it is likely that you will be charged in interest or arrangement fees.
Paying for the big day
As you start spending money, the constant flow of cash in and out of your accounts can be difficult to keep on top of. You can use your budget planner to record all the details of the payments you make. If you go over or under budget, make a note of it and decide if you’ll recoup the money from other areas or if you’ll invest more into the fund. Keep all your paperwork, quotations and receipts, and make a note of when deposits have been paid and when balances are due, as it’s easy to lose track and go overdrawn. If you and your partner use the same budgeting sheet, it will be up to date and you know what both of you are paying for.
Remember, if you’re using cheques to pay for deposits, they can take up to six days to clear. It can help to make a note of when you expect the payment to leave your account so you can ensure there is enough money to cover it and prevent going into an unarranged overdraft. Another option is to have a contingency sum of about 10% of the budget for payments you may have forgotten about or items you may have overlooked in your provisional costing, so that you don’t get hit with interest charges.
It may be a good idea to tell your bank that some large payments will be going out of your account in case the activity is suspected as being fraudulent. And if you’re going away on honeymoon, remember to also let your bank know, to ensure that you can use your cards while abroad. Check if you’ll incur any charges, to make sure you’re using the right card.