Plus: easy tips for couples to get started on the right financial path
Media Contact: Barbara Fornasiero; EAFocus Communications; email@example.com; 248.260.8466
Wyandotte, Mich. — May 13, 2021 — If you’ve ever wondered how brides and grooms pay for elaborate weddings, it may come as a surprise that it isn’t always Mom and Dad or maxed out credit cards paying the bills. It could be a good, old-fashioned wedding loan, according to Carma Peters, President and CEO of Michigan Legacy Credit Union (MLCU).
Wedding loans fall under the umbrella term of signature loans, which are unsecured and can be used for a variety of purposes, including an engagement ring, the wedding reception, or the honeymoon. Peter says their usefulness depends on the financial situation of the bride and groom.
“From a personal and industry perspective, I am of the belief that a married couple should not start their life together burdened by unnecessary debt, so if either future spouse is carrying significant debt, additional debt for a wedding or related expense could be a negative influence on a new marriage,” Peters said. “But there may be an option for some to take on a smaller loan for wedding expenses, if they own a home or car that can be used to negotiate a better interest rate on the loan.”
Peters explains that if a potential borrower owns a car that is paid off and worth $10,000, that can incentivize the credit union to offer a more attractive rate on the loan because the car can serve as collateral if necessary. Similarly, with adults marrying later, it’s not uncommon for one or both spouses to have a home or condo with some equity in it. That also works towards gaining a more attractive interest rate. In general, unsecured wedding loans would be limited to $10,000 to $15,000 unless there is some collateral to mitigate the risk.
While wedding trends pre-Covid were lavish extravaganzas, it remains to be seen if post-pandemic wedding budgets will scale back, whether due to a reduced comfort level with large gatherings or a smaller budget due to interrupted employment over the past 15 months. Still, Peters advises to keep weddings in a price range that makes sense for the couple’s current financial situation and long-term goals.
“A marriage is the beginning of a couple’s financial journey, and they need to be on a shared path,” Peters said.
Peters recalls the best wedding she’s ever been to; it was that of a young couple in Oregon who had very little money to spend on a wedding, so they rented rustic outdoor space, grilled hot dogs, burgers and Oregon’s Tillamook grilled cheese sandwiches and served them on plates they purchased at a thrift store and donated to shelters after the wedding.
“I have such fond memories of that wedding and the love the couple showed for each other in not spending beyond their means. Because so many people chipped in to help, everyone felt more a part of the festivities.” Peters said. “Had they made different choices for the day, they might still be paying off their wedding loan almost ten years later.”
Peters offers the following financial tips for engaged or newly married couples:
- Find a blog for hacks to save on wedding and reception expenses; for example, buying an affordable sheet cake to cut in the kitchen, and having a smaller, fancier cake for pictures.
- Openly discuss each other’s spending habits and note how you will move forward from a spending perspective as a couple in a way that is comfortable for both of you.
- Agree up front to an amount that one person can spend without informing or asking the other person. Depending on the couple’s financial situation, that could be anywhere from $50 to $1,000 or more.
- Shared or separate accounts? This critical issue needs to be decided early in the engagement.
The plusses of a shared account:
- It holds both of you accountable to each other for budgeting and spending
- As you unify your relationship, you also unify your financial relationship
Separate accounts may be best for:
- Couples where one is a spendaholic; keeping finances separate may help avoid fights
- Situations where one spouse has past credit issues; separate accounts can help guard against potential levy or garnishment issues
- Situations where one spouse is a saver; all of the savings can go into this account so the spender has to ask the saver about purchases that can then be agreed upon together
- Watch/listen together to videos and podcasts from vetted sources on budgeting and finances—then talk about them.
- Fully commit to shared financial goals for both short and long-term purchases and lifestyle choices. Whether you have a little money or a lot, married couples will always be on a financial journey.
Peters says her credit union staff are always happy to sit down with couples to help them come up with a savings plan – for weddings or for everyday life. She says such discussions will always include her favorite financial tip.
“Track all of your expenses. Financially successful people can account for every penny they spend,” Peters said.
About Michigan Legacy Credit Union
Michigan Legacy Credit Union (MLCU) is a member-owned, not-for-profit financial cooperative serving members who live, work, worship, attend school, or own a business in the state of Michigan. Michigan Legacy Credit Union is committed to providing quality financial services at a competitive price, delivered professionally and efficiently while keeping member/owners and their needs first. For additional information on MLCU, visit: www.michiganlegacycu.org.