On Saturday night, I was out with some friends, including vacation rentals arizona one who s planning her wedding for next August. I ve had a bunch of family weddings in the last few months, so I suggested she check out a nearby stationery store for her invitations. It s really expensive, like $14 per invitation. But at least you can get some ideas for design.
She looked at me and, without a hint of arrogance, said, Oh, I ll check it out. I actually talked to my family and we have an unlimited budget for the wedding. With one sentence, I was rendered speechless. She didn t brag. She just said it matter-of-factly: Her wedding could cost anything and it was ok.
She comes from a very wealthy family, so this isn t such an unusual thing. What is unusual, however, is that so many people will scoff at the above story and then proceed to spend ungodly amounts on large purchases like a new home or a wedding while steadfastly insisting how absurd most people are. Today, I want to write about how to plan for these large life events. But be prepared you re going to have to confront vacation rentals arizona the hypocrisy that we all have when it comes to these purchases.
vacation rentals arizona When my first sister vacation rentals arizona called me to tell me that she d gotten engaged earlier this year, I was out with my friends. vacation rentals arizona I ordered champagne for everyone. When my other sister told me she was getting married a few months later, I told all my friends again. Then I found out they were having an East coast wedding and a West coast wedding each for a total of four weddings in a few months. I ordered a round of cyanide and made mine a double.
That s what got me started thinking about weddings recently. The average American wedding costs almost $28,000, which, the Wall Street Journal notes , is well over half the median annual income in U.S. households. vacation rentals arizona Hold on: just wait a second before you start rolling your eyes. It s easy to say, These people should just realize a wedding is about having a special day, not about putting yourselves in crippling debt.
But guess what? When it s your wedding, you re going to want everything to be perfect. Yes, you. So will I. It ll be your special day, so why not spend some extra money to get the extra-long roses or the filet mignon?
My point isn t to judge people for having expensive weddings. Quite the opposite: vacation rentals arizona The very same people who spend $28,000 on their weddings are the ones who, a few years earlier, said the same thing you re saying right now: I just want a simple wedding. It s ridiculous to go into debt for just one day. And yet, little by little, they spend more than they had planned more than they can afford on their special day. Why is that?
The spending for weddings increases year after year. Yet we insist that we will be different: Of course we won t spend that much. Of course we ll have a budget. Of course vacation rentals arizona we ll have a small simple wedding. Sure we will.
Cut costs and have a simpler wedding . Most people, vacation rentals arizona frankly, are not discplined enough to do this. I don t say this pejoratively, but statistically: Most people will have a wedding that costs tens of thousands of dollars. (If you want to debate the difference between the average or median amount, see here or below for a simulated wedding budget.)
Do nothing and figure it out later . Most people do this. I spoke to a recently married person I know who spent the last 8 months planning her wedding, which became a very expensive day. Now, months vacation rentals arizona later, he and his wife don t know how to deal with the debt resulting from the wedding. If you do this, you are a moron. But you are in good company since almost everybody else does it, too.
Budget and plan for the wedding . Ask 10 people vacation rentals arizona which of these choices they ll do, and every single vacation rentals arizona one of them will pick this one. Then ask them how much money they re saving every month for their wedding (whether they re engaged or not). I guarantee the sputtering and silence will be worth it. (Leave a comment describing what happens!) This is a great idea in theory, but is almost never followed in practice.
We actually have all the information we need: The average age at marriage is about 27 for men and 26 for women . We know that the average amount of a wedding is about $28,000. So, if you agree with this choice and you don t want to go into debt for your wedding here s how much you should be saving vacation rentals arizona ( RSS readers, click here ):
More commonly, though, we don t think about this at all: one of the most major expenditures of our lifetimes, which will almost certainly arrive in the next few years, and we don t even sit down for 10 minutes vacation rentals arizona to think about it. Something s broken here.
Note how changing the amount of guests doesn t really change the cost very much: Reducing the headcount 50% only reduces the cost 15%. Creating a simple, affordable wedding, it turns out, is surprisingly hard.
Weddings are just one example. We don t plan out our largest expenses, like houses, cars, and even kids. This is what I call conscious spending but, honestly, it s much easier to simply ignore these looming purchases and think about them later.
The problem is, if you don t plan ahead, it becomes much, much more expensive. From the example above, a 25-year old who starts saving for his wedding will have to save 3.5 times the monthly amount a 20-year old will. The alternative is to simply finance it, which makes it even more expensive because of interest. This is especially true of long-term loans for houses .
1. Be realistic . Even though you re reading personal-finance blogs like iwillteachyoutoberich and are probably better at your finances than 99% of other people, you re still human. Your wedding vacation rentals arizona (and mine) will be more expensive than we plan. The head-in-the-sand approach, however, is the worst thing we can do. Sit down and make a realistic budget of how much your big purchases will cost you in the next ten years. Do it on a napkin it doesn t have to be perfect! Just spend 20 minutes and see what you come up with.
2. Set up an automatic savings vacation rentals arizona plan . Since the last recommendation to make a budget was completely unrealistic and almost nobody will do it, I suggest just taking vacation rentals arizona a shortcut and setting up an automatic savings plan. Assume you ll spend $25,000 vacation rentals arizona on your wedding, $20,000 on a car, and (however much) on a down payment for a house. But Ramit, you might say in an annoying perfectionist voice, that s almost $3,000 vacation rentals arizona per month. I can t afford that! Can you afford $300? If so, that s $300 better than you were doing yesterday. Now that you ve read this, your preparation or debt is a choice.
3. You can t have the best of everything, so use the P word . Prioritization vacation rentals arizona is such an important concept. Like I said, it s human nature to want the best for our wedding day or first house, and we need to be realistic about acknowledging that. With that said, we simply can t have the best of everything. Do you want the better food or an open bar at your wedding? If you have the costs on paper, you ll know exactly which tradeoffs you can make to keep within your budget. If you haven t written anything down, there will appear to be no tradeoffs necessary. And that s how people get into staggering amounts of debt. For the things you de-prioritize, beg, borrow, and steal to save money: Use a public park instead of a ballroom, ask your baker friend to make the cake, and ask relatives vacation rentals arizona to help with cleanup. This is where, if you plan ahead, time can take the place of money.
Today, sit down and plan out the major purchases you ll have in the next ten years whether or not you re engaged or have any plans to buy a house soon. This is really important: Planning before you need to separates rich people from everyone else . Plan out how much you ll reasonably need. Plan out how much you can save. Then go into your savings account and set up an automatic deposit plan. (I use ING bank set up an ING account in about 15 minutes .) Starting tomorrow, your savings account should have virtual buckets of money for upcoming items (e.g., 30% for your down payment, 25% for your wedding ).
The result: A wedding where you know all the costs and prioritize for what s important for you. A wedding vacation rentals arizona where, the day after, you re debt-free and can start your lives together. And the ability to control vacation rentals arizona your spending, instead of having it control you. Sort of like the point of this entire vacation rentals arizona site .
I ll write more about the logistics setting up automatic savings plan in my upcoming book , I Will Teach You To Be Rich. To get early excerpts and the chance to be featured in the book, sign up for my free newsletter ( sample newsletter here ):
funny, here in Spain people also do BIG weddings, having 100 guests is like NOTHING usually between 200 and 400. How do they pay for it? On the lower part of the invititation letter the couple includes their bank account number and you re expected to give about 100-120 Euro (130-150 $). There are even people who make a profit with their wedding. The more people you invite, the more money you make.
(1) I m not going to get married in time to meet your 27-year old cutoff. Now I can not only NOT be rich but feel doubly bad on your website sans fiance. Oh, and your publishing vacation rentals arizona a book didn t make me feel any better, either.
(2) $28,000 would be a bargain in comparison to most of the weddings I ve been to. I wonder how the average got to 28k, considering I ve been to 100k and 250k weddings yeah, booze, country clubs, and ice sculptures can add up. And if you think that s bad, should we start saving for bat mitzvahs at 6?
Really though, Ramit, vacation rentals arizona I think you ve hit upon a very crucial issue. vacation rentals arizona Whether it be that we spend way too much on weddings (god help me if I have to invite all my family and friends or, worse yet, everyone on my facebook account), vacation rentals arizona or that we just generally don t plan for any of life s ridiculously expensive landmarks, we all have a problem. It may cost $1500/month vacation rentals arizona to get by, but that hardly takes into account any sort of down payments, vacation rentals arizona unemployment, engagement rings, graduate degrees, and the like.
Our reception hal
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