For years, wedding guests brought household items as gifts for the bride and groom such as toasters, sheets, personalized welcome mats, and so on. But it’s more common now for guests to gift the bride and groom with cash as people understand that though it’s possible to have too many kitchen blenders, it’s impossible to have too much cash.
If you’ve been lucky enough to get a nice little windfall on your wedding day, you may be wondering what your best use of it should be. Here is some advice on what to do with those thoughtful and much-appreciated gifts of cash.
Arguably the least fun or romantic thing to do with your money, but maybe the most practical. Even if you don’t want to squirrel away all your wedding cash, you should consider investing some of it into a high-yield savings account. Search your various options, like opening a savings account at the bank you use for checking, credit unions, certificates of deposit, 401K or IRA plans, or annuities.
Your First Home
According to The Zebra, the average price of a new home in 2022 is $348,000. So even having the bare minimum down payment of 5% means you’ll need $17,400. If you’ve already been saving for a home, any wedding cash you get can be added to that to get you to where you need to be. In fact, the more money you can put down upfront, the lower your mortgage interest rate will be.
Although, keep in mind that there are programs for some first-time homebuyers that allow you to purchase a home with no money down. But even in those cases, you’ll still need money for things like closing costs, homeowner’s insurance, home warranties, movers, furniture, utility deposits, and the like. So even if you have your down payment covered, your wedding cash can still be invested into your new home together.
Paying Off Debt
It is always a good idea to pay off debt before spending money on something else. This is especially true when you are planning to buy a home. The average wedding costs $27,000, and the average student loan debt is $37,172. That means that most couples have enough money left over from their wedding gift cash to pay off their student loans and still have some leftover for other savings goals if they’ve been receiving cash in order to help them pay for their wedding.
If you are considering paying off your student loans with your wedding gift cash, it would be wise to find out the interest rate on your student loans and compare it with the interest rates on home mortgages and see which would be the wiser investment.
Starting a New Business Together
Using your wedding cash to begin your own business can be exciting and smart. Starting a business with your own money instead of having to borrow it means you’ll have more time for your business to begin paying you back without having to worry about paying on a business loan.
And as a married couple, you'll have someone who understands you and is there for you through the good times and bad. It's also likely that both of you will have similar goals, values, and visions for the future of your business. And if one of you wants to pursue their own goals or interests outside of the company, it's possible that they'll continue to help out on a part-time basis or as an advisor or mentor.
With a few tried-and-true steps, you begin your new business venture with a clear plan for success. You can also use online services and resources to help you get started. For instance, there are guides (and even formation services) that can help you learn how to start an LLC in Illinois. Also, the business idea you choose should be something you both like to do, are good at doing, and something people will purchase at a price that will make a profit. You may want to keep some of your cash for an emergency fund but check with a financial advisor to get advice on your best options.
The best thing to do is to make a list of all the things you want and then prioritize them based on what’s most important to you, like saving for a home, becoming debt free, or opening your own business together. Once you have your list, it will be easier for you to make an informed decision on what to do with your wedding gift cash.
Are you still planning for your big day? If so, let Michelle’s Bridal & Tuxedo help you find the perfect dress for you. Visit our site today to start exploring.