Helping your child finance their wedding is one of the best gifts you can give them, particularly in today’s tough economy. The cost of the reception alone can easily add up to a young person’s entire annual salary.
Depending on your economic situation, you might need to explore various options. Here are four points to cover when financing your child’s wedding.
1. Find Your Best Lending Option
What if you decide to finance the wedding by taking out a loan, either solo or with your child? Chances are, you can score a much better interest rate than they can, assuming you have more income and a higher credit rating.
One option you might consider is refinancing your house. You can often find more affordable rates than you would on an unsecured loan. Credit cards should be your last resort, as many of them charge exorbitant interest unless you immediately pay off the balance.
2. Weigh Competing Needs
A wedding is a big financial investment. Is the pomp and circumstance the best use of your funds? The national median rent recently increased by 16.4%, making many people pay 50% or more of their income on housing — if they can afford a roof over their heads at all.
If money is tight in your family, settling for a smaller affair with the rest going toward a down payment gift is a far better bet than one big party.
3. Seek Creative Ways to Supplement
You might not have to finance much or any of your child’s wedding if you can rustle up some extra cash in the months preceding the big day. If you’re handy with a camera, you can make money selling your photographs online. You could also look into side hustles such as driving for Lyft or Uber or renting out a spare bedroom on Airbnb.
4. Discuss the Future With the Newlyweds
Your child will probably become flush with cash at their reception. You should discuss what to do with the money before the big day. For example, you should speak up early and often if you expect reimbursement.
You can also help your child invest that cash. Diversify their investment with various risk vehicles. Lottery tickets can have a huge payoff, but you shouldn’t gamble more than 10% to 20% of your haul, depending on your financial situation.