Is a Wedding Loan a smart idea?

Your special day often comes with a pretty hefty price tag.  The average cost of a wedding keeps rising and is currently around $30,000. It’s a big expense, especially for those starting out it life. While some couples have the savings they need to fund their event and others have parents or family who are willing to foot the bill, those who don't often turn to credit cards and personal loans to cover the cost.

Most weddings have a few major costs, and a cluster of smaller ones, so it’s a good idea to start by listing everything you can think of, and how much you’re willing to spend on each.  How much money do you have to contribute to your wedding and how much if anything will your families contribute? Do your research and make sure your expectations are achievable and are in your wedding budget range. 

It may be great to get the wedding of your dreams but before you go into debt for you big day consider what other options you have:

• Can you have a different type of wedding that costs less, ie an evening cocktail party, a high tea, or something informal like a picnic?

• What about extending your engagement and giving yourself more time to save for the wedding?

• You can also lower the cost of the wedding by prioritising what is truly important to you about the day and cutting back on other areas.

• You can take on other jobs or additional side projects to save up some money for the big day.

If you are still short on funding then you could consider a loan, however see it as a last resort. It is not ideal to be entering your new marriage with debt and no matter how low the rate of the loan is, you still have to repay the debt.

There are some basic questions to consider before you make the decision to take on a wedding loan.

• Are you sure this one-day event is worth taking on a large amount of debt?

• Can the loan be repaid without too much hardship?

• Is there an emergency repayment plan ready in the event of income loss?

• Do you and your partner agree about how wedding finances are being handled?

• What after-wedding items are you losing out on as a result of potential wedding loan interest payments?
  

Your wedding day is certainly important, but it's a good idea to take steps so it doesn't come with a mountain of debt. Before you figure out your financing, think about what is really best for you, your partner and your combined future.

Lisa Dudson is a bestselling author and Registered Financial Advisor with over 15 years industry experience. Lisa offers financial advice through www.acumen.co.nz and co-owns the New Zealand's leading property investment agencies www.ifindproperty.co.nz & www.propertyladder.co.nz