I have always been fascinated by social and cultural shifts that occur over time. While I do not count myself a socio-economical authority by ANY stretch of the imagination, I am nevertheless captivated by articles which refer to changes in group dynamics with each generation. The shift from Generation X to Generation Y is one such shift in culture which has been particularly interesting to watch – but from a practical standpoint, Gen Y brings with it new and unique challenges as a wedding industry professional insofar as the couple’s budget. Specifically – they don’t have one.
The challenge of Budgeting/Financial Planning for this new generation of bride is a bit “chicken or the egg”. Many bridal magazines and websites advocate that brides establish a budget and may offer a standard breakdown of the most common divisions of many bridal categories to help give brides an idea of what % of their budget to set aside for key items (such as photography, food/beverage, or attire). Is this helpful – yes! Of course! You can take all the help you can get!
But from where I sit (and where many of our industry partners sit, too, I might add), bridal magazines and web resources put the cart before the horse: They share with you the importance of setting (and sticking to) a budget – but how do you determine what you can afford to spend?
By establishing a reasonable and practical wedding budget that is within the limits of what you can earn; a budget which is established after all your monthly expenses have been paid, means that you can plan your wedding with financial confidence. It means that when the wedding is over, you are left with memories of a beautiful day, a partner in matrimony AND you didn’t have to take out loan equivalent to a year’s college tuition.
So – you may be asking yourself: How does one properly determine their wedding budget?
Well fasten your safety belts, people! We are off to the races in budgeting 101!
1. Determine your net take-home pay. This is the amount of money that you and your fiance bring home each month after taxes and pre-tax deductions (such as health insurance, HSA contributions, etc). Basically, what is the amount of money you expect you deposit every single month? If you work a full-time job and a paid a salary, this should be very simple for you – each of your deposits is likely to be a fixed amount each check. But, if you work in a sales or commission environment, this will be more difficult. It would be best, in this case, to take your income over the last 12 months and establish your average monthly income based on a year’s performance. Don’t get lazy and just do the last three months – IT WILL bite you in the tail later. By taking a full year’s performance, you take into account “slow months” and “stellar” months.
2. Be honest with yourself: What does it take to live each month. If you haven’t established what your monthly “nut” is (that is: the amount of money it takes to run your life each month), now is the time to do it. Add up ALL of your expenses each month: Rent, Car Payments, Insurance Payments, Credit Card Payments, Cable, Electric – everything. Don’t go deciding what you can live without just yet – we will get to that in a minute. Here, it’s best to OVER estimate rather than UNDER estimate. For example, if your Cable bill is $196 a month, round up to $200. If your car payment is $245 a month, round up to $250. When it comes to variable expenses (like your cell phone bill, electric bill, etc.), it’s best to take a 12-month average. If you are planning your January wedding in March when it’s comfortable and you aren’t running an AC all that much, you may find yourself scrambling when your heating costs start kicking in mid-October, for example. Add these items all together to determine what your Fixed Monthly Expenses are.
Oh – and if you and the Fiance like to eat out – be sure to include it your budget. This is the single most common place budgets get thrown out of whack! Date nights, vacations, ice cream on a warm day… all of it comes from the same pool of money – so be practical and honest with yourself about how much you spend on “miscellaneous” expenses.
3. Do the math. On a piece of paper (or if you are really fancy, in Excel!), enter your Total Net Income. On the line below it, enter your Fixed Monthly Expenses. Subtract your Fixed Monthly Expenses from your Total Net Income. This will tell you what your available disposable income is for the month. Woah! Fancy words! “Disposable Income” means “Money you can live without” … or, more specifically: “Money you have available to put toward your dream wedding”.
6. Establish the Budget. Ready for it? Ready to understand the great mystery in creating a budget that will work for you?? Take the figure you obtained in Step 4: Do the Math and times it by the number of months you have between now and the big day. If you want to be NICE to yourself, shave one month off.
Voila!! You now have a REAL figure on the amount of money you will have to spend on your wedding.
This figure is a real number you can take to the bank – or in this case, take FROM the bank without sweating bullets you won’t make rent in order to pay for your wedding shoes, will have to file for bankruptcy in order to get the veil you love or sell your first born child in order to make that open bar a reality.
In next month’s blog, we will talk about how to stick to the budget you’ve set. After all, the best budgets are the ones that can be kept!
Can’t wait for next month’s entry? Dying to know more? Call us! We’ll give you the inside scoop!