Why Taking a Personal Loan to Pay for Your Wedding Might Make Sense
Weddings are what dreams are made of. They are the start of something new and exciting, filled with hope and love. The time to come together as families and wish the next generation the best, as they move toward building a life together.
Planning a wedding is fun, but it can be stressful too, particularly when it comes to budgeting for the costs. Weddings can be expensive, but they don’t have to be. The best weddings are the ones that are based on the couple’s personal style and filled with love.
According to The Ascent article summarizing various wedding studies and statistics, the average cost of a California wedding in 2019 is $39,000. Whatever your budget, you may want to plan on going over by 20%, creating a cushion to help cover unexpected extra items.
There are several ways to pay for a wedding, including:
If you’ve saved up $10,000-$40,000 for your wedding, then congratulations on being a prudent planner! Although using your savings can be a comfortable way to pay for this special day, you may want to ask yourself if you want to “drain” your accounts or leave these funds for future use as a married couple. One option to do this is to use your savings for a share-secured loan. This allows you to keep your savings in your account, earning interest, and use the share-secured funds to pay for wedding expenses at a fixed-rate.
Although using your credit card to pay for wedding expenses can be very convenient, it can also be risky. If you plan on using a credit card as your primary tool to pay for wedding expenses, we recommend that you create a very strong budget prior to making purchases and stick to it. We also recommend that you take advantage of 0% balance transfer offers, so you can pay off this debt quickly after the wedding.
As you decide the best way to pay for your wedding, one option you may want to consider is a personal loan. Personal Loans have fixed rates and terms, allowing you to obtain a loan to cover your budget and pay it back monthly for the term of the loan. Personal loans can reduce stress, as many feel more comfortable knowing exactly what they will need to pay each month and for how long. They also come with a much lower interest rate than credit cards, making the use of these types of loans to fund your wedding less risky and much more affordable.
Cash from Parents and Family
Although many of us have supportive parents and family members who will contribute to paying for wedding expenses, most couples will still need to cover some expenses on their own, particularly their honeymoon. If this is the case, we recommend referring to the above-mentioned options, suggesting a personal loan may be your best bet.
We wish all “soon to be married” couples and their families the absolute best as they plan, budget and host the wedding of their dreams. We are here to help fund the expenses in the way that makes best sense to you, so please reach out to Wheelhouse Credit Union if we can be of service.
One of the most important things we can teach our children is how to successfully manage their money. This, along with good manners, will help them achieve their goals as they become adults.
Sharing good money management techniques with your kids can start as early as elementary school. In fact, we recommend the following tips to teaching your children good habits based on their age.
Open a Savings Account for each of your children at the age of 5 (or as close to it as possible).
Give the new Savings Account a Nickname, using the respective Child’s Name so you can periodically show them their savings account balance.
Fund the account with around $100 to get them started.
Each time your child receives money as a gift, have them deposit half into their new Savings Account and spend the other half on something fun.
When your child wants to buy something, you can show them the balance on their account, so they can see how much it would cost them to purchase the item. This will give them an idea of how long it takes to save for certain items.
If possible, provide your child with opportunities to make money. You can give them the option to unload the dishwasher, take out the trash, and/or unload groceries for $5 per chore. Then, have them put half into their Savings Account and spend the other half on something fun. They may want to put their “fun money” into a Piggy Bank and save it up for something bigger.
Make sure your child has a Savings Account designated for them at the beginning of high school. If not, open one as they start their freshman year.
Apply the same practice as noted above, encouraging them to put half of the money they receive into their Savings Account, spending the other half on something fun.
Offer your child various opportunities to make money around the house for doing chores such as mowing the lawn, cleaning the family bathroom, taking out the trash, etc.
If your child is interested in having a car at 16, or any other big purchase, they may want to use their Savings Account to save for it. Consider telling them you will match whatever they save, if this fits in your budget.
Show them their statements and screenshots of their Savings Account balance, so they understand how long it takes to save money.
When they turn 16, take them to the Credit Union to open a Checking Account and a Savings Account in their name. When they earn money, they can put half into their Savings Account and the other half into their Checking Account. Help them review their transactions weekly and balance their budget monthly.
These young adults should be entering college with some knowledge of how to manage a budget, along with their own Checking and Savings accounts.
Prior to dropping them off at school, go through their monthly expenses. Also review their monthly income, whether it be from a job, their allowance or from a student loan.
Have them calculate how much they need to cover their monthly fixed expenses: tuition, rent, utilities, cell phone, food, followed by how much they have leftover to spend on fun things.
Work Income + Allowance + Student Loan $
Tuition + Rent + Utilities + Cell Phone + Food
Leftover Each Month to Either Save or Spend
After their first year of college, we recommend they apply for their own credit card with limited spending power, maybe $500. This will allow them to start to build credit and further learn how to manage their money.
Last but not least, it is important to remember that setting a good example for our children is always the most effective way to teach them good habits, the same is true for instilling good money management skills. Don’t be afraid to share how much things cost relative to how much you make, let them know how much you have to spend weekly and how you budget to meet your family’s objectives. Talking about money can be fun and should be started early, so the subject is comfortable for all.
IRA Contributions Deadline Extended to May 17, 2021!
The Internal Revenue Service recently announced that individuals have until May 17, 2021 to meet certain deadlines that would normally fall on April 15, such as making IRA contributions and filing certain claims for refund. So, it’s not too late to open an IRA and/or make a contribution to help manage your tax exposure.
When it comes to IRAs, you have a couple of options and opportunities, each coming with different tax benefits and intended uses. There are also contribution limits based on age and timing restrictions. To help you decide which type of IRA is right for you, and so you can make an informed decision that may help you reduce your tax burden this year, here is some insight into Traditional and Roth IRAs.
A Traditional IRA is a type of retirement account in which individuals can make pre-tax contributions and the investments in the account grow tax-deferred. In retirement, the owner pays income tax on withdrawals from a Traditional IRA. The maximum contribution amount is $6,000 per year for those up to 50 years of age; $7,000 for those over 50 and these contributions can be made up to the age 70 ½. At the age of 72, there is a required minimum distribution on Traditional IRAs, which is determined by an IRS formula.
The two big benefit of a Traditional IRA are:
Since Traditional IRAs provide an opportunity for tax-deferred earnings (earnings are taxed when withdrawn), they can be particularly helpful to those who anticipate being in a lower tax rate in retirement.
Traditional IRA contributions may be tax deductible, reducing tax burdens for contributors.
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. Roth IRA rules dictate that as long as you have owned your account for 5 years and you’re age 59 ½ or older, you can withdraw your money when you want to and won’t owe any federal taxes. One thing to consider is that with Roth IRAs, you are contributing post-tax money, which impacts your current income. The maximum contribution amount is $6,000 per year for those up to 50 years of age; $7,000 for those over 50.
The benefits of a Roth IRA are:
Roth IRAs offer tax-free earnings and withdrawals.
Regular contributions can be withdrawn anytime, tax-free and penalty free.
Unlike the Traditional IRAs, there are no mandatory withdrawals at age 72.
Wheelhouse Credit Union offers both types of IRAs, each with the option to be opened as a Daily Savings Account, a Certificate or both. There is no monthly service charge for either type and they are federally insured by NCUA up to $250,000. We recommend checking with your professional tax advisor for direction and answers to questions specific to your personal financial situation.
Note: Although a normal/qualified distribution may not have an IRS penalty, if an IRA is set up as a Certificate and a distribution is taken during the Certificate term, then an early withdrawal penalty will apply.