Northwestern Mutual: Choosing Between a Down Payment and a Wedding?

Weddings can be expensive. It’s not uncommon for couples to question whether it’s worth spending so much on the big day, especially when they could use the money for something else, like a down payment on a home. Here are some things to consider.

Reasons to choose a big wedding

There are many practical reasons for a couple to choose a wedding beyond just wanting to celebrate their love, including:  

• A big party is a priority: While it’s only one day, it’s a big day. And couples don’t get to do it over again. If these will be important memories for the couple, they might choose to go ahead and plan a wedding.
• The engaged couple is good at saving: Couples might want to consider how long it took them to save the money they’re thinking of using on a wedding. If they’re efficient savers, then they can likely hit that goal again in a reasonable timeframe to make a down payment on a home.
• A house isn’t that important right now: For some people, buying a home and starting to build equity is important. However, for some young couples, a nice apartment is perfectly suited to their current needs. They might not feel ready to take on home repairs, upkeep, and other responsibilities.
• Bringing distant friends and family together is important: It’s hard to get people to travel across the country for a backyard barbecue—but they’ll probably do it for a wedding. Sometimes just having the whole family together is important, and perhaps the couple has always dreamed of celebrating their union among family and friends. In this case, choosing a wedding can make a lot of sense.

Reasons to use the money for a down payment

Couples might choose to forego a big party and instead become homeowners for many reasons, including: 

• Having a wedding simply isn’t a priority: This is a good place to be honest about the importance of wedding memories. If they’re important, the couple should have the wedding. But big parties aren’t everyone’s thing. If it’s not a priority, then why spend money that could go toward other uses?
• The couple wants to settle down and start a family right away: If this is the case, the smart financial choice might be purchasing a place to raise that family.
• Saving is challenging: If a couple thinks they’ll have trouble saving for a down payment within the timeframe they’re hoping to buy, it may make more sense to purchase a home first.
• The couple is looking to build value with their money: No one is saying that a wedding isn’t valuable. But from a purely financial standpoint, a home is an asset that couples can sell someday. Purchasing a home means the couple will have an asset that will have future financial value.

Having both

Of course, it isn’t necessary for a couple to spend all their savings on the most expensive wedding or the biggest home they can afford. Some couples decide to compromise on size and get both. That could mean a smaller wedding, or a DIY ethos and public venues to host a large wedding at the fraction of the cost. The couple might decide to have a picnic in the park with a homemade cake, pizza, and a good friend as an officiant. Or, they might decide on a destination wedding with a simple ceremony on the beach and fewer attendees, leading to lower expenses overall. Out-of-the-box thinking can benefit couples buying a home, as well; many couples turn to alternative routes of purchase, like buying foreclosed properties or fixer-uppers, to acquire a home without needing a huge down payment. They might also decide to go for a more affordable condo or co-op as their first home.

Financial conversations to have

Whatever the decision, couples can benefit from honest discussions regarding goals and finances. By communicating and establishing shared priorities, new families can better plan out their strategies for growing their wealth over time and meeting their financial goals. Couples should share their honest thoughts about whether they want to first purchase a home or have a wedding.

Regardless of their choice, couples discussing the future will want to touch on their overall finances—this includes financial goals, retirement planning, whether to combine their finances fully, budgeting, and other priorities. They may also want to cover life insurance. Whether couples are purchasing their first home or getting married, they now rely on each other’s income. Many couples choose to get term life insurance to ensure that their partner’s needs will be met no matter what happens.

Whatever the decision, couples benefit from a clear understanding of each other’s goals as well as the resources at hand.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.

Source: Northwestern Mutual