Yahoo Finance How To Help Your Child Pay For Their Wedding While Protecting Your Nest Egg
According to a recent statistic published in Forbes, the average cost of a wedding in 2024 is $33,000. This is a huge number. And, traditionally, it’s the bride’s parents who get saddled with it. But while parents may love their children, they too have lives and needs — including their retirement savings and overall comfort in old age.
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So what can parents do if they wish to help pay for a child’s wedding while preserving their own nest egg? Turns out, it can have much less to do with liquidating assets than it does with, well, solid parenting.
Teach Your Children the Role of Money From a Young Age
David Ciccarelli, the founder and CEO of Lake, is the father of four kids — three daughters and a son. For him, “the goal isn’t to raise kids. Instead, it’s to create adults.”
Ciccarelli is more than happy to make sacrifices for his children to set them up for success as long as they don’t rely on him doing it in the future. This is where dialogue and education come into play at a young age. He wants his kids to know that “money is a tool to provide for their needs and security” and not, for instance, an expendable luxury. At a certain point, they will need to be self-sufficient.
In fact, David Delisle, bestselling author and expert on financial literacy, explained that one of the biggest considerations in planning a child’s wedding is their understanding of the earning potential of money. If you invest “$10,000 instead of spending on a wedding, you should be able to safely withdraw 5% of that or $500/year forever. Or if you don’t touch that money and let it compound, it could be worth $20,000 in 7-10 years and $40,000 7-10 years after that,” he said.
This by no means is justification to avoid spending money on a wedding altogether. It is, however, a helpful concept to understand when deciding whether getting married at The Plaza is the smartest option. Delisle also explained that, since money is one of the top causes of divorce, imparting this knowledge to your children can have a significant impact on their marriage and future.
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Utilize Advanced Planning and Diplomacy
Ciccarelli said it is key to plan and budget well in advance. “We set a specific amount aside to help the kids at key stages, and the amount should cover post-secondary in a four-year program, as well as their wedding,” he said.
His main reason for this? “If your child is one to make a big ask, then you can inform them that all the children are being treated equally and have the same amount ear-marked for them specifically,” he explained.
Again, it’s a balance between offering your children financial assistance while not hindering their growth into fully formed, self-sustaining adults, which then doubles back in helping preserve parents’ own funds. (The choice of when to tell the children the specific number set aside, however, is a personal one.)
Focus On Sentimental Value
While Ciccarelli is in the fortunate position of being able to choose whether or not to set aside money for his children’s weddings and how much, others aren’t always so lucky.
Lindsay Bryan-Podvin, a financial therapist at Mind Money Balance, encourages parents to support their children only if their own financial needs are met. Increasing parents’ financial instability puts a strain on their relationship with their children and may even result in greater responsibility for the child in the form of caretaking in older age.
The best gift a parent can give their child is their own “stability and security,” Bryan-Podvin said. “For example, having an emergency fund, healthy retirement contributions and low/no high-interest consumer debt.” If those boxes are checked and parents want to contribute to their child’s wedding, Bryan-Podvin said to go for it.
However, if parents have other financial responsibilities they must tend to but still want to contribute, they can assist with items of a smaller monetary value that have a larger sentimental value. “For instance, if the parents and child share a love of music, parents could pay for a live band. Or if the happy couple are foodies, the parents might cover a dessert-tasting menu. There are ways to get creative … without being stuck with a bill that’s too big to pay or feeling resentment on a day that’s about celebrating joy,” she said.
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This article originally appeared on GOBankingRates.com: How To Help Your Child Pay For Their Wedding While Protecting Your Nest Egg
