Weddings are more than a celebration of love and commitment – they are also a big financial decision.
Generating annual revenues of $4.3 billion and keeping 54,000 in a job, the wedding industry makes roughly the same contribution to the Australian economy as the baby products and cheese manufacturing industries. Estimates of the average cost of a wedding in Australia range from $36,200, according to research firm IBISWorld, to $48,296 according to a Bride to Be magazine survey.
Your wedding may be a special day, but there are more financially savvy ways to spend a cool $48,000 – ways that can help put money in your pocket rather than leave a gaping hole in your finances. For starters, you can invest that money towards a deposit on a home. In Brisbane, where according to Australian Property Monitors the median price for a house is $433,244 and for an apartment $338,910, a sum of $48,000 constitutes more than a deposit of more than 10 percent.
In Sydney, where the median house price is $641,037 and the median apartment price $462,145, you would need to save a little more to reach a 10 percent deposit – but $48,000 is certainly a good start.
Financial planner Brad Fox, who is the national president of the Association of Financial Advisers, also suggests opting for a cheaper wedding and using the money saved to make an extra superannuation contribution.
“Just $10,000 added to super doubles every 10 years,” Fox says. “So if you add $10,000 to your super at age 30, by age 60 that contribution is worth $80,000.”
There are also other ways to enjoy long-term benefits from the money you can otherwise spend on an expensive wedding. Ask any financial planner, and they’ll tell you the smartest move would be to “pay down” any debt – and our biggest debt is usually a mortgage.
If you already have a mortgage, of say, $300,000 and make a lump sum payment of $48,000, you could save $113,847 in interest and shave six years and three months off the life of a 25-year mortgage. Even making a smaller lump sum contribution of $10,000 to your mortgage can help by saving you $30,238 and one year and seven months over the life of the mortgage.
Another factor to consider is how much it will end up costing you if you have to borrow to pay for your big day. A personal loan of $40,000, repaid monthly at a rate of 14 percent over two years, will cost more than $46,000 with monthly repayments of $1,921.
Fox’s advice is to think long term: “What people should consider is that the effect of $46,000 in either paying off debt or making an investment is not a one-year number – it provides a long-term benefit.”