How To Pay For My Wedding: Cash, Credit Or Loan?

It’s estimated that the average cost of a wedding in Canada is just over $30,000. That’s wild when you think about it, since that money could be used to pay off your student debt, to buy a new car, or as a down payment on a home. But this is your wedding, so no expense should be spared for your big day, right?

Well, I suppose if you can afford it, go for it, but spending that much money on a single day isn't something you shouldn’t rush into. Many people don’t exactly have $30,000+ lying around, so they need to plan their wedding accordingly. Costs can quickly get out of hand, which is why you need to manage your cash flow. For some couples, they may consider using credit cards or a personal loan to help them get to their wedding day, but is that the right choice? It’s time to find out.

Figuring out your wedding budget

Wedding planning can be weird. Everyone is trying to upsell you, so your wedding budget can get out of hand quickly. You do have a wedding budget, right? If not, start a spreadsheet now and estimate how much everything is going to cost you from your DJ to your limo driver. This is a good start but keep in mind that prices can vary quite a bit from your estimates. It’s a good idea to have a rough final number you don’t want to go over so you can plan accordingly e.g. make cuts where you have to.

Let’s say that the number you’ve decided on is $30,000 and you’re planning to get married in 18 months. That would mean you need to set aside $1,666.66 ($833.33) each month to break even by the time your wedding arrives. It’s worth noting that some expenses come up much earlier than others, such as a venue deposit, but the monthly goal is really about keeping you honest.

Now if you’re able to save that much every month, great. For those who don’t have that much cash flow, they may want to consider other methods to fund their wedding. You may want to consider DIY projects for certain items to save money on vendors and reduce costs. For example, you could make a DIY wedding bouquet to save money on hiring florists. For larger items or vendors needed, a loan may be the right option for you.

Should I use a credit card to pay for my wedding?

Let me stop you right now if you’re thinking about paying for your wedding with your credit card. Credit cards charge on average 19.99% to 30% interest. You’d be paying a devastating amount of interest if you decided to go this route. That being said, there are a few scenarios where charging your wedding to your credit card makes sense.

Let’s say you do have the cash to pay for your wedding as all your expenses come up, you’re better off charging them to your card credit. By doing this, you can take advantage of any cash back or travel points that are being offered. There are many travel credit cards that offer $250+ in points as a welcome bonus, which is a great thing to take advantage of. Of course, this only makes sense if you’re able to pay the full balance on your credit card every month.

Another option is to use a low-interest credit card. You won’t earn any points but you would only pay around 8.99% - 12.99% in interest on your purchases. That's still a lot of interest to pay, but it’s about half of what the interest rate is for most regular credit cards.

If you can’t pay the full balance when your statement arrives, think of using credit cards as a last resort. Yes, the minimum monthly payments will be affordable but you’ll be paying way too much interest in the long run.

Does getting a loan for my wedding make sense?

Let’s assume you can't reduce your wedding expenses. You’ve slashed everywhere you can but you’re still in the red as your wedding date approaches. I certainly understand that loans are sometimes necessary.

If your family can offer you an interest-free loan, that's great. But many families simply can't help out. This is when a personal loan becomes a viable option. These types of loans vary so it’s really important to understand the terms of your loans. Besides the interest rate, you’ll want to find out if the loans can be called at anytime e.g. where you need to repay it right away.

Be aware that some loan companies advertise low interest rates, but they could actually be much higher, so make sure you do your research. Regardless of what type of loan you get, you should try to pay it back right away. If you’re fortunate to get some cash gifts for your wedding, use that money to repay your loan.

Final thoughts

Paying for a wedding in cash or keeping your expenses down is always the best thing to do, but it’s not always that simple. A personal loan is an option, just be sure to try to get one with the lowest interest rate possible and pay it back as soon as you can.

Now that you're armed with some tips about how to pay your your wedding, take a few minutes to check your free credit score with Borrowell to see what you could qualify for.

About the Author

Barry Choi is a personal finance and travel expert based in Toronto who makes frequent media appearances in Canada and the US. You can read more of his work at moneywehave.com or follow him on Twitter: @barrychoi