Getting married and buying a house are two huge financial milestones that often occur around the same time. These milestones often compete with each other but it doesn’t have to come down to ‘down payment or dream wedding.’ With a good financial plan, you can turn your dreams of a wedding and a new home into a reality. Here’s how.
Set your priorities
Your first task is figuring where you stand together. Have an honest conversation with your partner to discuss what your greatest priorities are and how they relate to the way you allocate your money. It’s okay if your priorities don’t match; what’s important is discussing what compromises you’re willing to make to achieve both goals. It can be difficult to save for a big wedding and a home at the same time so you may need to adjust your expectations.
Create a budget
Settled on your priorities? Great! Now it’s time to create a realistic budget for both the house and wedding. Review your combined incomes and expenses to determine how much extra income you have (if you haven’t already, having a regular monthly budget is helpful). Take a hard look at your discretionary spending and see where you can cut back.
Once you know how much you can save each month, you need to figure out how much you need to save for each event.
Saving for a house: determine how much home you can afford. Check out home prices in your areas and consider getting prequalified from a lender. Prequalification is a basic review of your creditworthiness to give you an estimated amount of how much you can be qualified to borrow. It’s not binding but it’s a good starting point. In addition to getting prequalified, it’s smart to review your actual budget to determine how much you’re comfortable borrowing.
We have some additional resources on how to budget for a new home and saving for a down payment.
Saving for a wedding: determine who will be contributing to the wedding. Most couples pay for the wedding themselves but sometimes their families may cover some of the costs. The next step is discussing the type of wedding you want. Do you want a big, elaborate party, an intimate elopement, or something in between? How many guests do you plan on having? The number of guests will have a big impact on your total wedding budget.
You can get a little creative to save some additional money on your wedding:
- reduce the guest list
- choose a more affordable venue
- choose an off-season date or get married on a Sunday
- use in-season flowers and find ways to repurpose flowers (i.e. use wedding ceremony flowers to decorate the reception site)
Keep savings separate
Create separate savings accounts for the wedding and your down payment. This will reduce the temptation to dip into the account and use funds earmarked for house for the wedding and vice versa. Having separate accounts also makes it easier to keep track of your progress and of your spending.
Avoid taking on new debt
Having a strong credit score is key to getting the best possible mortgage package. In order to land a favorable interest rate, you’ll want to avoid taking on new debt, especially if you’re paying for a wedding at the same time. If you need to put some wedding costs on a credit card, be sure to pay them off each month to keep your credit utilization rate and debt-to-income ratio low.
Adjust your timeline
Your budget for your wedding and down payment will determine your timeline. Break down the total amounts into monthly savings goals to figure out a workable timeline. If you’re feeling pinched saving for both events, consider pushing your timeline back to give yourself additional time to save and more breathing room.
This is an exciting moment in your life! Setting your priorities and creating a plan will help you start off your new life on the right foot.
Find your happily ever after in a new Hayden home. We’re excited to help you find the home that’s just right for you. Visit us online to learn more about our homes and new home communities in Idaho, Oregon, and Washington.