Weddings are the most extravagant of the many celebrations we attend and host throughout life. There are meticulous details to focus on during the ceremony, cocktail hour, and reception, not to mention getting yourself ready. Hiring makeup artists, caters, and florists isn’t cheap, and that’s just a portion of your expenses. Here are some important things couples should know about wedding savings accounts, as well as a few tips for saving money on the event.
What Is a Wedding Savings Account?
A wedding savings account is an account at a bank or credit union that holds the money you’re dedicating toward your big day. Opening this type of account helps ensure you have the money you need for the celebration and makes budgeting easier since your wedding cash will remain separate from your household money. You can deposit or withdraw wedding money as needed without worrying about covering other life expenses, such as standard monthly bills.
Why Have a Wedding Savings Account?
We all know weddings are expensive—the average event costs around $30,000—and most of us don’t have that kind of money readily available. When you have a savings account dedicated to wedding expenses, including your florist, caterer, venue, photographer, etc., it’s easier to save accordingly for the big day.
Talk to Your Partner
Finances can be a touchy subject, but it’s one of the key topics to discuss with your fiancé before getting married.Talk with your partner and come to an agreement about how much money you want to spend on the wedding and how you’d like to save for it.
How Do You Pick the Right Account?
Depending on where you open your account, you may have different options for savings. Some banks and credit unions offer specialty savings accounts, such as wedding or vacation funds, that individuals can use for big-ticket purchases. You can also open a traditional savings account to hold your wedding money. Talk about all savings options with the bank or credit union of your choice so you can select the ideal account based on your needs.
Alternatively, you could open a certificate of deposit (CD) account, which is a time-sensitive savings fund. When you have a CD, you decide how long you’ll wait to withdraw the money, and CDs often earn interest over the lifespan of the account.
Banks vs. Credit Unions
As you choose the type of savings account you want to open, you’ll also need to decide whether to open that account at a credit union or bank. Determining where you open your savings account depends on the account’s lifespan and whether you want to earn interest on the money you deposit.
Often, banks offer various services, including the ability to track your account online or through an app. This makes it easier to plan your budget and note how much money you have in the account, as well as the amount you still need to save. Likewise, withdrawing cash is fairly simple and only requires a trip to your local branch’s ATM.
As a bank member, you can open an account that earns interest, such as a CD, or take out loans for your big day. However, it’s important to note that banks often have higher loan interest rates than credit unions.
Unlike banks, credit unions are not-for-profit financial institutions. To become a member, you must meet key criteria, such as living in a specific city or working a certain job; ultimately, every credit union has different requirements.
Generally, credit unions offer better interest rates on loans and pay a better APY on savings accounts. A higher APY may be ideal if you plan to have a long engagement, as the interest you earn on your savings will continue to increase the longer you have the account open. For instance, if you earn a monthly interest rate on the account and leave it open for 36 months, you’ll make far more than if your engagement is only for 6 months.
Deciding on an Institution
The advantages and disadvantages of each bank and credit union depend on the specific institutions in your area. To make the best choice, research savings options at a few banks and credit unions that you qualify to join. From there, you can compare the perks of each, such as accessibility to your money and interest earned.
What Are Some Tips for Saving Money?
Saving money isn’t always easy since life comes with a lot of expenses, both planned and unexpected. Upon learning that the average wedding costs around $30,000, you may feel a bit overwhelmed. This feeling is natural as that is a lot of money, but challenging certainly doesn’t mean impossible. Remember that the total price of your big day depends on where you get married, when your nuptials take place, and the vendors you hire.
Once you’ve decided how much money you want to spend on the entire event, you can start saving by doing the following:
- Prioritize areas of your wedding budget
- Establish a timeline
- Rule out unnecessary expenses
- Keep track of all expenses
As you begin developing a plan to save money, you should also know whether you or your partner’s parents will help pay for the wedding. If you’re not sure who pays for what on the big day, it’s always best to separately meet with each of your parents to politely ask whether they’re considering making a contribution. Once you know what percentage of the budget you need to save for, use the following tips to help you set aside the proper amount.
Prioritize Areas of Your Wedding Budget
Knowing how much money you’ll spend and what you’ll spend it on are two different things, but they do relate. When setting your budget, create a list of everything you’ll need to pay for, such as:
- Wedding planner or day-of coordinator
- Wedding attire
You should also consider the time of year you want to get married in; summer and fall are the most expensive, while mid-winter is typically the least expensive. Once you have your list of expenses, organize them according to what’s most important to you and your true love. Visually laying out what you’ll spend your hard-earned money on makes saving easier since you’ll have tangible goals in mind instead of just the wedding in general.
Establish a Timeline
You should also give yourself a timeframe for when you’ll open your wedding savings account and when you’ll get married. The account’s lifespan makes it easier to decide whether opening one that earns interest is worthwhile. For instance, if you plan on a longer engagement, a savings account with $10,000 earning 1 percent interest would gain $100 in the first year. As you search for the right bank or credit union, consider how much interest they pay and how long you’ll have the account open to determine your earnings.
Rule Out Unnecessary Expenses
It’s much easier to save money when you make even slight adjustments to your typical spending habits. Aim to reduce frivolous purchases so you can put that money into your wedding savings account.
If you’re unsure whether an item is truly necessary, ask yourself, “Do I need this?” While basic groceries fall into the need category, other items, such as gourmet coffee or a bottle of wine, are a want that you might be able to forgo.
Everyday Bride Tip
A lot of us make frivolous purchases because of how easy it is, especially if it’s an impulse buy. If you want to save as much as possible for your wedding, make a list of essential items and stick to it when you do your shopping.
Keep Track of All Expenses
Anytime you withdraw from your wedding savings account, write the amount in a checkbook registry or add it to an Excel spreadsheet. By carefully tracking your expenses, it becomes easier to know exactly how much you’ve spent on every aspect of the wedding.
Ideally, you should personally track all expenses—even if you have perks such as online banking—to ensure every withdrawal in the account matches what you note in your registry or spreadsheet. Otherwise, you’ll have to rely on your memory and the amounts shown in your online account, which can create unnecessary stress if you see charges you don’t remember making.
A Closing Note
As you and your partner prepare to tie the knot, remember that there are many things couples should know about wedding savings accounts. Ultimately, keeping money in a special account helps you and your partner set aside the necessary funds for your wedding—and possibly even the honeymoon.
Take your time deciding on the ideal type of savings account and financial institution to open it in based on your needs. Although budgeting may feel frustrating at times, you’ll be happy you started early and made careful notes along the way once you reach your big day. Start saving now to have the money you need to make your dream day a reality!