June is traditionally the month of endings and beginnings. Endings, as thousands of students attend graduations across the country. Beginnings, as couples take the plunge into matrimony. In a sense, marriage is also an end, as it represents the culmination of a process; two lives coming together as one.
But in the journey to the altar, few couples take into account that it is also a meeting of finances. Couples’ pre- and post-marital bliss might be interrupted by some hardcore financial realities.
How are we paying for this wedding?
How do we balance our wedding costs with our future financial goals?
What, in fact, are those goals and how do we establish these?
Is the $100,000+ wedding really necessary?
Information sourced from Trinidadweddings.com founded by Simone Sant-Ghuran shows that slightly over 19 per cent of brides accessing the site had weddings budgeted at $80,000 and over. Financial advisers Clifford Manchoon and Winston Williams said most of these are paid for either with cash in hand or loans from a financial institution. Great, if it gives the couple the wedding of their dreams. Not so great, because it is likely to seriously affect their financial future.
“Remember the debt can continue to build,” said Sant-Ghuran in an interview.
“Newlyweds are in a phase where they are buying houses, getting a car, furthering their education. Their situation is compounded when they go into it with marital debt.”
“You are getting married, but you have to remember there is life after the wedding,” said Manchoon, of the IncreasingWealthClub.
“It is one of the reasons so many couples take so long to own their own home,” said Williams, a Pan American Life agency head.
“Because the wedding is normally funded with cash, or a loan, when you go to the bank to get the mortgage, you either do not have enough cash for the down payment or, because you are servicing that loan, your debt servicing ratio is so high that you can’t qualify for a mortgage, or you can only qualify for a lower one.”
How can couples have a wedding they want, yet still be able to afford the things they need afterwards?
“They have to take a page of out Stephen Covey and begin with the end in mind,” said Manchoon. The couple, he said, should outline everything they want for their special day and then put a cost to it.
“Let’s say after you sit and you decide on the elements you want, your wedding comes up to $100,000. If you do not have that amount of money to spend on a wedding, you need to decide what value you place on spending this amount for the wedding? This is where you start to trim.
“You start with your finished product, come up with a costing and decide what you can do. If you have $30,000, decide that you are going to work the wedding so that you stay within this limit.
“The days of the grand wedding were generally when your parents paid for the wedding,” said Williams. He said in a time of double income, professional homes, these days are slowly becoming a thing of the past. The Pan American agency head said with their future goals in mind, couples should scale down their expectations of their big day, opting to have a small, private or even civil ceremony with family and close friends at the reception.
Sant-Ghuran said in her experience this is one of the ways to cut costs by as much as 45 to 65 per cent.
“The number one way couples can control their costs is to cut their guest list. The bigger the guest list, the larger the venue you need, the more food and beverage you need.”
She also said the Do It Yourself Bride (DIY) movement was taking root in T&T and when done well, this was also another way to significantly reduce costs.
DIY brides can handle items like creating their own invitations or their own floral arrangements. However, Sant-Ghuran said that elements like makeup, photography and videography generally should be left to professionals.
Succumbing to what she termed “bride pressure” should also be avoided.
““They’ve gone to a fancy wedding, either a relative’s or a friend’s and they feel the need to replicate,” said Sant-Ghuran. But she said couples can save money by resisting this urge and adding their own unique touch to their wedding, which is generally more cost effective.
Changing the format of the ceremony and reception can also present some opportunities for savings.
“A garden wedding will cost less than a ballroom wedding, which requires lighting and special effects. Garden weddings are more informal. Instead of a plated dinner service, couples can have a brunch reception or a cocktail and wine reception.”
“Couples need to personalise their wedding a little more, so they don’t feel the need to live up to expectations,” said Sant-Ghuran.
Having the talk
Williams said the couple should be clear on their own expectations of each other when it comes to managing their finances. However, he said, this was one of the most difficult discussions for couples to have with many neglecting to do this before the wedding. But “the talk” can circumvent several difficulties.
“They go to the bank, and the bank does a debt servicing ratio to see how much they qualify for. You would be amazed at the number of people who find themselves for the first time realising that their spouse has a loan they never mentioned,” said Williams.
“The impact of that is their joint debt servicing ratio determines whether they get the mortgage or don’t, or the amount of mortgage they qualify for.”
“There should not be these kinds of surprises between the couple. First of all, it may negatively impact the relationship. Secondly, it raises some suspicion, if you didn’t tell me about this, what else are you not telling me about? Once trust is eroded, it is very difficult to rebuild.”
Williams said most couples are either afraid or ashamed to broach the issue. Most are also stuck in a cultural mode when it comes to money, without realising the need to compromise with their spouse. The Pan American agency head said this can especially be seen when the partners come from different social backgrounds.
“If you were one who grew up on the more conservative side, or on the other extreme, the more lavish side, it is easy for you to continue in that vein, with the other person tending be a little bit uncomfortable with the way you do things.”
Williams said other issues that tend to crop up after the wedding are age differences between the partners and their respective attitudes toward money, the amount paid in alimony and other financial provisions for former spouses and children from previous relationships.
“This causes a lot of conflict because it impacts on how much money is being spent in one household versus the other. Questions arise as to what happens to the assets that the couple has accumulated? Will they be left with the current family or assigned to children had before the marriage.”
Williams said the discussion should be approached in an indirect manner.
Where direct questions may bring about evasion, Williams said, indirect questions were best.
“Instead of asking your intended ‘what do you do with your money?’ a better question might be ‘how are you preparing for retirement?’ In other words, I raise it in such a way that I get the same information without being too direct,” advised Williams.
“Another topic they can broach is the matter of children. Do we want to have two or three children?
“We are also getting older, how do we want to plan for their education? How do we want to plan for our retirement at the same time. How do we proportion our savings for those eventualities? A discussion like that gives each partner a sense of the other’s value system.”
The day-to-day handling of bills in the household should also be settled before marriage. Williams suggests a combination of joint accounts for handling items like the mortgage and utility bills but individual accounts for personal expenses.
“The couple can make a contribution to that joint account and have a standing order to take care of those joint expenses. If their expenses total $10,000 a month, then they can decide whether they will split that $6,000-$4,000 or $5,000-$5,000 and use a standing order to take care of those joint expenses. You don’t have to tell me you are buying a pair of shoes. If I want to go to lunch, it doesn’t have to be a joint consultation and we can maintain a level of independence. It lends to a more trusting relationship with less pressure.” said Williams.
Couples should also talk about the protecting their assets with insurance.
“Health insurance in particular is important as healthcare grows increasingly expensive,” said Manchoon.
“They need to talk about how much insurance they need in case one of them dies, becomes critically ill or disabled. It could mean protecting the dreams they have as a family and ensuring they do not die with one person,” said Williams.
Both Manchoon and Williams suggested that couples seek professional help to clarify their financial goals as well as to help them build on that groundwork once it is complete.
In the Sunday, May 24 edition of the SBG, in the article: “What does it mean to be pre-qualified?” Wendy Huggins of the T&T Mortgage Finance Company Ltd was mistakenly referred to by the wrong title. She is the assistant general manager, mortgage origination.
We regret the error.
