How To Save For A Wedding And A House

There’s been a lot of talk lately about the sudden sensation Netflix series that is “Marriage or Mortgage.” If you haven’t been swept up by the craze quite yet, the basic premise of the show is that couples are trying to decide between a wedding and a down payment on a home, and they only have the budget for one.

Real estate agent Nichole Holmes tries to woo them with homes, while wedding planner Sarah Miller attempts to get them to celebrate their love by showing them what the party of a lifetime could be like.

If you just sit down to watch the show for the first time, you may find that you have a gut instinct as to which is important to you. If you find that the side you take in this debate conflicts with that of your significant other, you may worry that the debate will lead to trouble in paradise. I’ve got good news here: It’s a false choice. You can have a memorable wedding day and have a house, too.

In this article, we’ll touch on how you can prioritize as a couple based on your values and your money habits. Then we’ll go over how to create a budget and save for multiple things at once. Finally, we’ll touch on dealing with surprise costs. But before we get there, it’s probably best to frame this by going over how much money we’re actually talking about.

Average Cost Of A House

One thing that’s important to realize about the housing market right now is that relatively low inventory has driven prices up, but on the flip side, mortgage rates remained very low in a historical context. This helps keep monthly payments more affordable.

The median sales price of a new home, according to the Census Bureau and Department of Housing and Urban Development, was $372,400 in the most recently available data for April. If you’re looking to save money by going with an existing home being sold by the previous homeowner, the median price is $341,600.

Of course, most people who aren’t wealthy prior to buying don’t pay the full sum with cash. You’ll have a mortgage, meaning that what you have to come up with upfront is the down payment and closing costs. We’ll get there in a minute.

Average Wedding Cost

Every year, The Knot, a site dedicated to weddings and industry trends conducts, a Real Weddings Study to determine the average cost of a wedding across the country. Last year, this cost was $19,000 between both the ceremony and the reception.

However, across the country and on the show, the pandemic really threw a wrench into things and those newlyweds really had to trim guest lists down to close family members and friends in order to comply with gathering restrictions. Because having fewer guests means cheaper costs, 2019 is probably a fairer point of comparison. The average cost in that year was $28,000.

Talk About Money And Values

Whether you’re going to prioritize a wedding or a home or attempt to do both together, it’s important that couples talk about money and their own personal financial habits as well as what you value in life. Is one of you a big saver and the other one someone who likes to splurge occasionally? Do either of you have a lot of debt coming into this next phase of your life? What are your life plans and how can the two of you combine to make them happen?

Personal values may play as big a role as monetary values. There was a couple on the show who didn’t want to live together prior to marriage. If you have personal reasons swaying you one way or the other, it’s important to realize this isn’t just a financial calculation.

Either way you go, you’re making a huge commitment to each other. If the stereotypical marriage vow is “till death do us part,” you might think of taking on a mortgage together as “till debt do us part.”

Before you make any decisions, you should also be able to talk about what each of you values in a home and in a wedding. Make a list for both.

For homes, is location or a big backyard more important? How many bedrooms do you need and are you OK sharing a bathroom or will you need your own space? When it comes to weddings, how big is your guest list? Is the food or the entertainment more important to you? This is just a starting point for these conversations. Go deep.

Once you’ve touched on what’s important, this will naturally lead into savings goals. For example, based on importance, you’ll be able to talk about how much you should be saving for things like a dress and the band for the wedding vs. a down payment. It doesn’t have to be a hard number at this point. Plans change in light of available opportunities, so be flexible with yourselves.

Get To Budgeting

Now that we’ve gone over some costs, let’s talk about what developing a budget looks like. It’s also important to think about where you’re living or getting married. It’s going to be more expensive to get a house or get married in New York City than it would to do either of those things in Traverse City, Michigan, for example.

Budget For Your Down Payment And Closing Costs

Everyone’s financial situation is different, so there is no one typical down payment. However, for the sake of illustration, let’s go over three different scenarios for a $300,000 home.

If you’re a first-time home buyer qualifying for a conventional loan, you can get into a home with a down payment of as low as 3%, or $9,000 in our example. The traditional wisdom of your parents may have been to save at least 20% for a down payment. There are advantages to that including not having to pay private mortgage insurance (PMI) and getting a lower interest rate, but that also comes at a cost of $60,000. Among all home buyers who got their home with a mortgage, the average down payment was 12% according to data from the National Association of REALTORS^® or $36,000 in our scenario.

You’ll also have to budget for closing costs. These vary depending on the loan amount and the type of mortgage you’re getting, but we tell clients to expect to pay 3% – 6% of the purchase price. On a $300,000 home, that’s $9,000 – $18,000. It’s important to be able to take all of this into account.

If you qualify for a VA loan, no down payment is required. However, most have to pay a maximum funding fee of 2.4% or 3.6% depending on whether it’s your first time using a VA loan or a subsequent use. If you receive VA disability, you’re an active-duty Purple Heart recipient or you’re a qualifying surviving spouse, no funding fee is required. The funding fee can also be financed into the loan.

Lenders can lower your closing costs by giving you a credit, but you should know that this is in exchange for a higher interest rate relative to what it would be if you didn’t have the credit.

If you’re saving for a down payment and closing costs, it’ll be good to budget what your fixed costs are for your current rent, groceries and utilities. Once you have these down, you can see how much is left over. If you’re also saving for a wedding at the same time, remove the amount that you’re willing to put toward the wedding each paycheck. Then put the rest of that income toward saving for the house.

When you set up your budget, also make sure that you’re saving for emergencies. You never know when a medical bill might come up or your car might break down.

Let’s also be honest about this. You don’t have to buy a house and get married all in the same 3-month time frame. You can supercharge your savings strategy by putting all of your disposable income toward one or the other and saving one of them for later. Again, it doesn’t have to be marriage or mortgage. But it also doesn’t have to be marriage and mortgage right now.

Create A Wedding Budget

There’s a lot that goes into a wedding, so let’s do a quick run through of some numbers. Although these are ballpark and based on national averages, it will give you an idea of what you can expect. All figures are courtesy of The Knot:

• Wedding venue: $10,500
• Wedding photographer: $2,400
• Videographer: $1,800
• Band: $3,700
• DJ: $1,200
• Florist: $2,000
• Planner: $1,500
• Wedding dress: $1,600
• Wedding cake: $500
• Catering (per wedding guest): $70
• Transportation: $800
• Wedding favors: $400
• Wedding invitations: $590
• Hairstylist: $110
• Makeup artist: $100

According to a separate article on engagement rings, the average cost of wedding bands is $900 for men and $500 for women. Alcohol costs average $2,300. You don’t want to run out of gin at your cocktail hour. Don’t forget to account for these costs in your wedding planning.

One thing to note is that many of these figures are negotiable or can be cheaper depending on what you want to do. Additionally, if it’s not a destination wedding, transportation probably isn’t necessary. It’s likely that you will have a band or a DJ, but not both. If the photographer and videographer work out of the same studio, you may be able to get a package deal.

If you find a venue, factor in whether things like tables, chairs and linens are included. If you’re looking for ways to save money, maybe you have friends who are good photographers and videographers take your photos. Maybe your bridesmaids can do hair and makeup for the wedding party. If you’re looking to save on catering, food trucks are particularly trendy at outdoor weddings especially. DIY centerpieces may save you money if you have a friend with some talent.

A sheet cake can be more budget friendly than something fancy. Cupcakes can also be an excellent substitute. For those who aren’t into cake, consider store-bought cookies or candy.

Finally, summer weddings are popular. However, you may be able to save on wedding expenses by getting married in the off-season, particularly with so many weddings being rescheduled due to COVID-19.

Tips For Saving Toward Multiple Goals At Once

If you’re saving for multiple things at once, it can get a little tricky. You also don’t want to rack up a ton of credit card debt in order to do it. If you want to buy a house in the future, you’ll need to keep your credit score in good shape. You might also still have a student loan you’re looking to pay off. We’ve got some tips to help you create a realistic savings plan.

Consider Your Timeline

Your savings strategy will depend heavily on the time frame in which you want to get this done. In the instance where you’re saving for both a wedding and a home, you’ll want to save for each in proportion to their estimated cost. Allocate that amount of your disposable income to the budget until you hit your goal.

If you choose to work on separate time frames, the same principle of a portion of disposable income applies. The only thing you’re doing differently is putting it all toward one thing at a time. This could help you be able to save for a down payment or a wedding date more quickly before getting on to the other one.

Calculate How Much You'll Need To Save Each Month

I talked about saving a portion of your income for the purpose of a wedding, a down payment or both. In order to figure that out, you’ll need to know about how much it’s going to cost. On the home buying side, you can use mortgage calculators to get an idea of how much you might be able to afford on your current income. From there, you can calculate the amount necessary for a down payment and closing costs.

In terms of the cost of a wedding, you can go to different venues and get price quotes from different caterers, bands and DJs. It’s a little more legwork, but you can determine the approximate cost of your big day this way.

Once you have your cost and your timeline, you can then do some simple division to figure out how much you need to save every month to meet your goal.

Create A Dedicated Savings Account

Whatever you’re saving for, it’s a good idea to have a dedicated savings account or CD separate from your checking account for these goals. You can put whatever amount of money you’ve decided you’re comfortable with based on your timeline and the amount needed in the savings account. By establishing one specifically for the purpose of wedding or home, you won’t be dipping into it for other expenses. This can help make sure that you stay on track.

Account For Unexpected Expenses

Whether you’re saving for a house or a wedding, you’ll want to leave yourself some wiggle room in your budget. Here are some unexpected expenses for each that you might want to think about.

If you’re buying a house, one thing to consider is that the mortgage company can’t loan you more than the home is worth because the house is the collateral. Because of this, if you really want the home but the appraisal comes in under your offer price and the seller won’t budge, you may have to bring the difference to the closing table. Additionally, there are moving expenses to consider. You may need furniture for the house. Finally, when you own the house, you have to fix or replace things that break. Depending on the age of the home, we recommend saving 1% – 3% of the purchase price for maintenance.

On the wedding side, maybe the RSVPs you anticipated goes up when your cousins come in unexpectedly from Texas. You’ll want to leave room there to add a table or two if you have to. If you want to have brunch for the people from out of town, you’ll need to plan for that, too.

Marriage Or Mortgage: Both Are Possible With The Right Plan

If I suppress my instincts as a personal finance writer, "Marriage or Mortgage” has all the elements that make for great TV. There are heartwarming stories, a little hilarity, some tear-jerking moments and times when I wanted to throw something – suppressing instincts is hard, OK. The bottom line is that you can have both a home and your dream wedding. It’s all about goals and timelines.

Now that you have the tools to move forward with a marriage and mortgage, let’s help you get started. If you’re ready for a wedding, you can look to apply for a personal loan. If you’re ready to start your home buying journey, apply for a mortgage online.

Looking for help managing your personal finances? Rocket Money can help you have greater control over your finances by finding your unwanted subscriptions, tracking your monthly spending and more. Take the first step toward reclaiming your financial health and create your account with Rocket Money today.