Buying a house and planning a wedding? This is how you can make both work for your bank account

Maybe you and your love can have it all. But, the secret to success with having both a house and a wedding is all in the timing and planning. Apply these steps.

Step away from the social pressure, and step into your vision

I’ve always found it weird how vocal friends and family members get about what you “should” do when it comes to two of the most important decisions you’ll make in your life; buying a home and marrying the person you love.

Take a break from the loud voices so that you and your honey can do some visioning about your money and your life. This is a dreaming exercise, and from a money psychology perspective, it’s also super helpful in aligning your values, boundaries and goals as a couple. Your dreams are the sticky glue that will keep you together when times get tough; financially, personally and professionally. That’s why we start here with a vision.

Think about the kind of home you eventually want to live in together. Where is it located? Is there a style you like? Are there compromises you’re willing to make if you can’t have exactly what you want? What’s the ideal timing? Do you have a head start on your savings for the down payment?

Now, think about the wedding you want. Do you view it as being traditional or modern? Are you OK to skip the big event and elope? What’s the ideal timing? What are your must-haves? Have you any savings for this set aside yet?

Get practical about your timelines, and your savings activities

We’re talking about potentially hundreds of thousands of dollars for these two personal milestones. And, it’s unlikely you can afford both at the same time, especially if you’re paying for it on your own — also, doing both at the same time would be dreadfully hectic.

Think about what comes first and why?

Next, you’ll want to set up a regular savings program to go toward these two goals, if you don’t already have one in place. For the wedding money, allocating it into a high-interest savings account with low-to-no-fees is going to help you earn interest on the savings. And, for the down-payment money, if you are a first-time homebuyer (or if you meet the criteria to make you eligible) you will have access to the RRSP Home Buyers Plan or the new Tax-free First home Savings Account as tools to help build your down payment. Review each program with your financial adviser to see which is the best one to focus your savings toward from here on in. If you need to save more and beyond the limits of these programs, many young couples use their TFSAs.

The first key with both your wedding and house money, if you plan to use it in the next two to three years, is not to expose it to market risk. In the event the market plummets in value, you would not want to lose your savings. The second key is consistent contributions towards these accounts on payday. And, when you come into any lump-sum money like proceeds from selling your motorcycle, top these accounts up further.

Sharpen your pencils on the price tags for both goals

For the house purchase there’s a down payment (a minimum of five per cent of the value of the purchase), mortgage insurance (this can be avoided with a 20 per cent down payment or more), closing costs, potential administration fees, taxes, moving expenses and more. Tally up the total money needed for the transaction to happen, and then go get yourself a soft mortgage pre-approval to understand your qualifying power for the amount of mortgage.

With this information in-hand, you can compare your current savings with what you need, weigh that against your timeline, and if you’re not happy with where you’re at, craft a more aggressive savings program … and look for a higher paying job.

For the wedding expenses, the same idea applies. Make a list of everything you will need to purchase, approximate the costs for each and then tally it up. Include estimates for attire, accessories, jewelry, venue, food, beauty and makeup, entertainment, photography, professionals you have to hire to actually marry you, flowers, decorations, gifts, invitations, planners and consultants, transportation, accommodation and honeymoon. Once you have your list in a spreadsheet, start getting real quotes for each part of your list.

If the total money required for your wedding seems absurd, it probably is. Post-pandemic, I haven’t seen a single traditional wedding cost less than $50,000. Sure, you’ll get some of it back with financial gifts the day of, but those can’t be relied upon … and what if all you get are air fryers and cookbooks — eeeekkkk!

Figure out who’s paying for what

Are you expecting (or hoping) to receive money from your in-laws or parents? It’s time to clarify the amount of money you expect, or want to ask for, and if there are strings attached. Work this money into your calculations. Most gift-givers will also need some time to organize their own personal finances in order to flow money to you, so take into account their timeline.

If you don’t like the timeline to reach the desired savings for your wedding and house, there are three ways to speed it up. First, reduce your spending expectations (eg. a lower cost home and a smaller wedding); second, save more money, which means trimming spending from other budget categories to prioritize funds towards these goals; third, make more money and put the difference towards your savings (eg. switching to a better job, starting a side-hustle, and earning as much interest as possible on your hard earned savings).

The amazing thing about planning for your wedding and a home purchase is that the process of visioning and saving are core skills you and your partner will need in order to thrive in your new life together. So, enjoy these moments of building upon your goals as a couple.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.