Should You Put All Your Financial Power into Your Dream Wedding?

If you’ve been dreaming about saying “I do” since you were a child, you probably have big plans for your wedding once Mr. or Mrs. Right comes along. And with big plans come even bigger bills. All the little things add — from your dream venue to your must-have caterer, an open bar, and fresh-cut flowers.

Last year, the average wedding and its reception cost couples $30,000— that’s as much as a down payment on a house!At this price, your wedding nest egg might not be enough. You may need to tap into other savings accounts, including your all-too-important emergency and retirement funds, or max out your credit cards.

While it might be tempting to throw caution to the wind, practically speaking it’s a bad idea. Check out these sensible reasons why you should keep your hands off your savings before tying the knot.

1. Your Emergency Fund Protects You from the Unexpected

If you haven’t touched your emergency fund in years, it can feel like this pile of cash is wasting away in your account. You might as well put it to good use to cover some or all of your wedding, right?

Wrong! You need to have some savings tucked away, even if you’ve never encountered an emergency before. Eventually, everyone runs into problems in their lives, and the emergency fund is your first line of defence.

Your emergency fund is a safety net that’s there to help you in case your budget doesn’t balance one month, you have to replace your car’s transmission, or you lose your job. These emergencies may not happen often, but you’ll be happy you have your savings if they ever occur.

2. Your Credit Won’t Be There as a Safety Net

Maxing out your credit cards delivers a one-two punch to your financial health. Not only are you now responsible for a large balance that accrues interest until you pay it off. But you also can’t rely on your credit card as a backup when your budget falls short.

This can be a stressful situation to be in any time you max out your cards — even if it isn’t for a wedding. Luckily, there are ways to get cash online in an emergency if you don’t have any savings or credit available. Online loans make it easy to apply for the funds you need for an unexpected expense, so you don’t have to waste time navigating red tape or visiting a bank branch.

3. Your Retirement Fund Needs Time to Grow

What about tapping your retirement fund instead of your emergency fund? After all, you probably don’t plan on retiring for another 30 years or so. A little skimming off the top won’t hurt.

Unfortunately, making early withdrawals comes with three major drawbacks.

1. In almost all cases, it triggers tax penalties.
2. You may also have to pay an early withdrawal fee.
3. It can significantly reduce the interest you accrue long-term.

Retirement funds are at their most effective when you start early with long-term, regular contributions. This maximizes your savings, as the interest you earn will also earn interest. By taking out money from this fund, the amount of compounding interest you earn decreases. 

The Takeaway:

Your emergency fund, credit cards, and retirement fund already have established roles in your finances, so they aren’t the best way to pay for a wedding. Instead, focus on how you can adjust your expectations to fit your savings, and remember, you can organize a gorgeous wedding on a budget.