Dear Carrie: My fiance and I were just starting to plan our wedding when the COVID-19 pandemic hit. Originally, we thought we would have a no-expense-spared, blowout wedding and reception sometime next year. We’ve managed to save up a pretty penny, but given everything that has happened, we’re wondering if we shouldn’t cut back. We’re also wondering what we should do with the money we’ve saved between now and our (eventual) wedding date. Your thoughts?—A Reader
Dear Reader: Your situation is a great example of how the COVID-19 pandemic has impacted our personal finances, possibly for years to come. I’ve heard from several readers and clients who are reassessing their priorities in a similar way, thinking hard about the way they want to spend, protect, and invest their money. Hats off to you not only for recognizing this shift in yourself, but also for searching for the best ways to respond.
In fact, if there’s a silver lining to this pandemic, it’s that Americans are saving more and spending less. According to the Bureau of Economic Analysis, the U.S. personal savings rate jumped from 8.2 percent in February to 12.7 percent in March to a whopping 33 percent in April of this year. Of course, 33 percent isn’t sustainable, but hopefully, it portends better savings habits in the future.
Another positive I’ve observed is that the pandemic has not only forced us to slow down how much we spend but has also given us the opportunity to be more thoughtful about how we spend, connecting our money to our values.
Your wedding illustrates this perfectly. Let’s take a look at how you can approach this important event with a fresh eye, including ways to protect or possibly redirect the money you have saved.
Start by Thinking About Your Goals
The first thing I recommend is that you and your fiance take some time to look beyond the wedding and imagine the things you’d like to accomplish and experience both individually and as a couple. Ask yourselves, for example, if you’re satisfied with your career paths, if you want to continue your education, whether you want to have children and where you want to raise them, and whether you want to buy a home.
You may not have all the answers, and you may change your mind down the road, but put it all out there for discussion—from tomorrow to 10 years from now to retirement. My guess is that these types of conversations will help cement your relationship, help you clarify your feelings about your wedding, and understand where it ranks with your other goals.
To get even more clarity, ballpark some numbers. If buying a home is at the top of your list, how much do you need to save for a down payment? Or if you want to go back to school or start a business, what will that cost? This type of examination is essential to really understanding your trade-offs and will ultimately be key to deciding how much you’re comfortable spending on your wedding.
Setting and Keeping a Wedding Budget
I’ve written before about the importance of a budget when planning a wedding. Don’t get me wrong. As a bit of a romantic myself, I’m the last person who is going to tell you that a wedding is a waste of money. I’m very tied to my family and friends, so I understand the importance of a group celebration. But as a financial planner, I’m also mindful of how successful the multibillion-dollar wedding industry has been at separating couples from major chunks of money.
Even with a modest wedding, it can be easy to overspend, so my advice is pretty succinct: Figure out your maximum spend. Do your research. Get firm prices. Be prepared to make trade-offs. And then hold a little in reserve for the unexpected. Remember, expensive flourishes don’t make a great wedding; great couples make a great wedding.
Your Wedding Is for You and No One Else
A budget is essential, but planning a wedding is part heart and part head. Money aside, only you and your fiance can envision the type of wedding that will be most meaningful to you. Don’t let yourself get caught up in someone else’s expectations, or even in the vision you might have had prior to the pandemic.
Once you’ve taken the time to think about and discuss your wedding in the context of all your goals and your life together as a married couple, I believe things will come into sharper focus. If a backyard barbecue with your closest friends and relatives now feels more appropriate than a lavish gala, trust that vision.
Taking the Best Care of Your Money Long Term
Finally, kudos for saving up money before your wedding. One of the worst things couples do is go into debt for their wedding and start out their lives together with a pile of red ink.
You’re also smart to think carefully about where to keep the money you’ve saved in the interim. As a general rule, any money you want to use within the next three years should not be in the stock market or any other potentially volatile investment. This goes for your emergency savings (we should all have a minimum of 3-6 months of savings in a rainy-day fund) as well as the money you’ve earmarked for your wedding and other short-term goals.
An interest-bearing checking account, savings account, money market account, or even a CD are reasonable places to stash this cash. Yes, the interest rates for all these options are currently extremely low, but the point is to prioritize safety and liquidity over return.
That said, money that you have saved for your longer-term goals is another story. Hopefully, you’re also saving for retirement, and those funds should be invested in a diversified mix of stocks and bonds (when a goal is far in the future, you typically have plenty of time to ride out the inevitable dips, potentially building wealth over time).
On the surface, money is hardly a romantic topic. But to me, the financial decisions couples make reflect their values and their shared vision for a life together. Best wishes to you and your fiance as the two of you celebrate your wedding and embark on the next chapter of your lives.
Carrie Schwab-Pomerantz, a certified financial planner, is president of the Charles Schwab Foundation and author of “The Charles Schwab Guide to Finances After Fifty.”
