This is a guest article by Sam, the author of the blog Financial Samurai and the founder of the Yakezie Challenge and Network. He writes a column for Consumerism Commentary every other Tuesday.
This past summer I went to my friends Peter and Stephanie’s wedding in Hawaii. Peter is 35, but looks 25, and works as a manager at a boutique strategy consulting firm. He probably pulls in between $300,000 and $400,000 a year, but you’d never know it by the way he casually dresses outside of work. Peter is a jeans and a t-shirt kind of guy and was once the quintessential super-motivated boyfriend. Stephanie is 31, but actually looks 22 and makes women jealous because she is so petite. Stephanie is also a manager at an accounting firm and earns between $100,000 and $150,000 a year with much better hours than Peter.
Banking Deal: Earn 1.75% APY on an FDIC-insured money market account at CIT Bank.
With roughly half a million a year in combined income and no family to support, Peter and Stephanie are surely considered well-to-do, even in an expensive city such as San Francisco. One would think that Peter and Stephanie would throw a lavish wedding of 200 or more people at some fancy resort for $80,000 to $100,000 like every other couple I know who makes that much. Not so.
Stephanie is even more conservative in her spending habits than Peter. Stephanie’s favorite store is Target, where twice a year she’ll splurge anywhere between $100 and $200 on her favorite clothes. She’s not into jewelry and her biggest vice is collecting $2 magnets and used stamps whenever she goes on trips. Stephanie is as low maintenance and non-material as it gets — a guy’s dream!
Lest you think Peter and Stephanie are cheap, I assure you they are not. They donate more than $10,000 a year to a charity I’m involved with, and they don’t skimp on their vacation adventures abroad.
After reading their backgrounds, how much do you think they spent on their wedding? How about $50,000, or just one tenth their gross annual income? Nope, not even close. Including airfare, they spent $2,050, or just 0.4% of their annual gross income! Let’s break down the costs:
- Airfare for two from SF to Kauai: $1,100
- Wedding ceremony with ukulele player and minister: $250
- Photographer with CD of photos: $300
- Beach venue: Free
- Hawaiian lunch reception for 20 where Peter first took Stephanie out on a date: $400 after tip
Peter and Stephanie invited their immediate family and closest friends. They didn’t want to make their wedding a big spectacle at all. For those who were able to fly out, fantastic. For those who weren’t, they threw a 50 person house party for them upon their return.
The wedding was absolutely magical. There was no stress and such a casual way about everything. The sun shined warmly and you could hear the palm trees ruffle in the breeze as the ukulele hummed and the minister preached. I’ve been to around 20 weddings, and this one was the most memorable by far.
What’s with the massive spending?
I don’t really understand the point of spending much more than $5,000 on a wedding, no matter what your income is. Sure, you want your moment to be magical, but the magic is more about surrounding yourself with magical people than thousand dollar floral arrangements and lobster tail entrees.
Instead of spending $20,000 (the average cost of an American wedding), you can use the money towards a house down payment or new household items. Invest the $20,000 in your retirement or in your child’s education. There are countless better ways to spend $20,000 than on a wedding that lasts half a day.
Like my one-tenth rule for car buying, perhaps each of us should adopt the one-tenth rule for wedding expenses. If you make $100,000, spend no more than $10,000 on your wedding. The rule helps ensure that you focus on what’s truly important, while maintaining sound finances. If you want to spend that typical American wedding amount of $20,000, make it a goal and try and make $200,000 or more before you get married. Peter and Stephanie spent 0.4% of their gross annual income on their wedding; surely you can spend 25 times their percentage and still have a grand time too!
How much did you or would you spend on a wedding? Do you believe it’s right for a couple to ask their parents to pay if they can’t afford the wedding themselves?
Updated October 21, 2015 and originally published November 23, 2010.