June 14, 2010

The importance of Budgeting

Posted in Uncategorized tagged , , at 1:42 pm by Amy

I’ll admit right off the bat – budgeting was not always my strong suit. It took years of making pretty big financial mistakes (shopping sprees and international trips) to finally learn my lesson about creating a budget and sticking to it – and thankfully it became habit well before Garry and I decided to get married.

One of the biggest issues couples fight over is money. In serious cases (as in when coupled with bad communication) it can lead to divorce if not corrected before marriage.

The wedding usually is the first very large budgeting situation that couples will find themselves in (unless, of course, they purchase a house or make other large financial decisions beforehand) and it can teach a newly engaged couple really how to handle finances responsibly (or it can go horribly wrong and the couple can end up with MASSIVE amounts of debt – which makes no one a happy panda).

While I know not everyone will agree with me – it’s my belief that a couple should never go into debt over their wedding. The lessons in saving for something special and the use of control over one’s spending habits (and the communication of how the money is going to be spent) is invaluable and makes for a financially stable household. There is no good reason to start a marriage in the red (long-term debt like student loans, or in the case of some – a mortgage are exempt from this). I think people forget that a wedding is not about how much bling or flowers you can fit into a day – but it’s about making a life-long commitment to the one person in the world that you love more than anyone else.

In this day and age where you can get anything and everything on credit, couples are spending on average $19,581 on their big day or in a range from $14,686 to $24,476 – according to www.averageweddingcost.com. This does not include the cost of a honeymoon or the engagement ring. More information on the site, plus a wedding cost estimator calculator.

Think about that – nearly $25,000! That’s a good down-payment on a house! Or a brand-new car! Spent all on one day!

Garry and I decided that we absolutely did not want to go into debt over our handfasting or our wedding. Actually – with the plans we have put into place – we’ll be completely debt free (excluding my student loans and his Jeep will be almost paid off) by the time we get married in September of next year.

Our budget (for our handfasting) is hovering around $1,000 (included in that is a plane ticket for Garry’s best man which comes in around $300) and our wedding budget is around $5,000 (but it’s looking more like we’ll only need $4,000) for the portion that we’re paying for* (also including another $300 plane ticket).

(*We are very fortunate that my parents have graciously decided to pick up the tab for the venue, catering and beverages)

Setting up a budget is actually pretty easy. All you have to do is take your monthly income and subtract all of your bills (rent or mortgage, utilities, groceries, transportation – etc.) and you’ll have an amount that’s left over. See if there’s anywhere you can cut costs. A while ago we were wondering why we had very little money at the end of the month. We realized after looking at our ledgers that we would spend over $400 on food a month! For two people! We cut our grocery bill almost in half and stopped eating fast food – which adds up REALLY quickly) and have faired a little better. In my case, I have an average of $600 a month after bills to pay for things like groceries and gasoline. After that I usually have around $300 -$400 a month that usually goes toward the renovations of our apartment building.

After looking at our budgets, we knew we couldn’t afford to set aside more than about $200-$250 a month each without really impairing on our lifestyle or potentially causing some financial trouble. We wanted to keep in mind that we’ll still want to do things like go out to dinner with friends, go to a movie or maybe take a day-trip every once in a while because it’s a good idea to relax and take your mind off of wedding planning (so I’m learning at least). Also – we’re saving up for a house. We could go ALL out and set aside $800 a month, but then we wouldn’t have money set aside for a down payment on a house – which in the long run – is much more important to both of us than really expensive flower arrangements.

Once we knew how much each month we could set aside (mostly for our legal ceremony, but for the handfasting too – just to see how far we can stretch our budget), I went into Excel and put together a worksheet of all the items we need to purchase (my dress, decorations etc.) and put in a budgeted amount for each item – that’s the “Estimated Cost” column. As we purchase items I add the actual cost into an adjascent column titled “Actual Cost”  (and highlight the row so I know it’s purchased). That way we can keep track if we’re going over (or under!) on our budget and find out where we can splurge or where we can cut costs. For example: I budgeted $150 to buy patterns and fabric for my bridesmaids. I ended up only spending $80. That leaves me $7o that I can put somewhere else – like a port-o potty (something I had completely forgotten about beforehand) since our handfasting is going to be pretty much in the middle of the woods.

The extra money is important to have in case you run into unexpected costs (and you will) like emergency dress alterations, delivery/set-up fees, taxes and gratuity (which can total to nearly 30% of the original cost tacked on!). The best way to start getting an idea as to how much a particular item (or something like a venue) is going to cost is to call the vendor and see if packages are available (those are usually pretty good about giving good details on cost) and then make absolutely sure to ask about gratuity, cake cutting fees, tear-down/set-up fees, or any other fees that are not listed on the package (because chances are they won’t bill those costs until you receive the final bill the day of your wedding) and when payments are due. When possible – get a very clear contract with specific amounts and specific dates.

Another tip that has helped us immensely so far with our budget is utilizing the talents and generosity of our friends and family.

We are fortunate enough to have friends that are professional dj’s, photographers and have amazing skills at sewing and decorating. Our own skills are helpful too – I do a lot of work in the Adobe Suite at work and can design my own custom invitations and print them at home. They look like I paid over a $1k for them, but really – only $50 for paper and supplies. 🙂

Chances are good you’ll have tons of friends that are willing to help out (if you ask nicely and provide pizza!) with things like assembling favors and invitations. Another way to cut down on costs is to email invitations to people who are technologically savvy (think friends from work and people who might not keep the invite in a scrapbook like your grandma might) in PDF format. There are also online services to email invites and save-the-date cards. www.smilebox.com is a good site for you techno-folk out there. You pay $5 and you can get your invites or save-the-dates ad free! Plus there’s music to choose from if you’d like to add it. (Emailing saves a ton of money on postage and is very green since you’re not printing a ton of cards). We’re planning on doing a mix of both – we’re emailing and handing out invitations. We’re snail-mailing a few, but only to our family and a few out-of-town friends.

Now, don’t get me wrong, if you’re on a budget for your wedding (which I would guess that’s the vast majority of us out there) everything does NOT have to be DIY. (Garry and I are just that special kind of crazy!) If you are on a budget, but don’t find yourself particularly crafty or don’t want to deal with the absolute and pure frustration of  putting everything together – you can always go on sites like ebay or etsy and purchase what you need for a good deal. The goal here is to keep on the look out for good deals and to be open to ideas.

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