Though it may not be a romantic thought, planning an engagement, wedding, and honeymoon gets expensive. Luckily, it’s something that you usually have time to plan for. Modern-day couples typically date for at least a couple of years before there is a proposal, and the average engagement is close to a year, with many being longer. What’s important is to take advantage of that time to start saving for these milestone moments. Justin Bailey of Vimvest, a financial planning app, answered some questions to help soon-to-be newlyweds build their budgets wisely.
Question: What is the average millennial spending on an engagement ring this year?
A: Millennials will typically spend around $3,000 on an engagement ring, which makes up around 10% of the average millennial’s income (i.e. it’s often a major purchase). This goes along with the fact that millennials are having to spend more than their parents in a lot of major areas. Some of the biggest expense categories have risen significantly (e.g., rent +46%, college tuition +213%, raising a child +70% at least, vehicles 69%, and health insurance 800%). Planning ahead for an engagement ring is more important than ever – that way a smaller percentage of a millennial’s annual income would be needed for large individual purchases.
Q: Oftentimes couples are saving for honeymoons and weddings at the same time, so how should they best divide these savings?
A: One way would be to evenly divide the cost of the wedding and honeymoon between the couple. Then, start creating goals and keep the saving amount consistent for a predictable budget.
Q: Should couples set separate goals for each of these events and save separately or combine into one big “wedding” account?
A: The more detail the better. Meaning you do some research, set multiple goals, and get as close to the exact cost for each. This helps you prioritize the indispensables and see what’s realistic beyond that.
Q: What would you say works as an average percentage to take out of your paycheck each week for each? Both?
A: For something as important as a wedding and honeymoon, somewhere between 5-10% from each paycheck can work well. Getting started saving as soon as possible is key. For the average millennial couple, this can turn into somewhere between $3,500 to $7,000 saved per year. A two-year engagement at 10% per paycheck, along with the average amount of help from parents (55% or so), should allow for a beautiful wedding and honeymoon sans any debilitating early-marriage debt.
Q: How can you best separate these savings without feeling like you have no money left for everyday expenses?
A: First, separate “everyday expenses” from “everyday luxuries.” Second, a good practice is to break your saving into a daily amount. It will be the smallest number to deal with, which should help you know how many luxuries (e.g., expensive coffees and meals) you can avoid each day. The same two-year engagement at 10% of the average millennial income comes to around $9.50 a day. The average Starbucks habit comes to over $4 per day – almost halfway there!
Q: Can you expand a bit on what the timeframe for saving 50% towards an average wedding ring looks like?
A: The key to that perfect ring, while also not falling into debt, is to start saving as soon as that someone special shows up. If it’s looking like an engagement is a year away, $5 a day gets you 50% toward the ring. Cut that in half ($2.50 a day) if a two-year relationship is more appropriate in your situation. Time is your friend when it comes to saving. Take advantage of it.
Q: What other everyday activities do you suggest giving up, besides coffee purchases, and replace with saving for a big goal, like a wedding/honeymoon/engagement ring?
A: Be prepared to avoid anything you consider an “everyday luxury” when a large purchase is looming. Take a look at those sneaky monthly services or fees as well. Everything adds up, and when a few dollars a day can get you comfortably to a goal, the benefit is often worth the sacrifice.
Q: Do you have any other tips for making saving for the big day feel more like paying a subscription rather than a chore?
A: Use a free app that can help keep things automatic and separated, just like a subscription. Make sure the app can handle the wide variety of goals that surround a wedding. Also, make sure it can be personalized to fit your priorities and budget.
Q: When saving for a wedding, should you separate your savings or put all the money into one?
A: Keep the logistics as simple and automated as possible. If you haven’t yet started sharing money or accounts, there’s no problem with saving separately. Split the amount evenly or pick the goals each person will save for. The trick is to get started!
Q: How long do people usually save for a honeymoon?
A: It can range from six months to two years, depending on the honeymoon location.