Color of Money Live: Remember to stay in a budget for your wedding

Jun 20, 2019

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So glad you could join me today. So what's on your mind about your money?

Oh, and did you read my column about weddings? Love the headline: Your maid of honor is not made of cash

What are your thoughts on the amount of money guest and wedding party participants are paying these days?

As always, love hearing your testimonies.

Anyway, let's get started.

I like your philosophy of maintaining emergency and life happens funds. I am about to buy a home which means that I will have a tighter budget than ever before and also a much higher likelihood of unexpected expenses. How much do you recommend for each fund? I currently rent and don't own a car so my 'life happens' fund has only been about medical bills. (Now I'll be responsible for appliances?!? Yikes!)

Good question and congrats on being ready to buy a home.

Here's what I recommend:

Emergency fund: Three to six months of living expenses as a goal. You don't have to reach it now. Just aim for it. Start first with one month and then just keep adding until you reach the goal. This is particularly important as a new home owner. And by living expenses I mean all the money it takes to run your house (and now for you, your new home) for a month. So if your monthly expenses are $3,000 you save $3,000 for one month's worth of expenses. Then $6,000 for two month's, etc.

-- Life Happens. You are so right about adding to this once you become a home owner. With a rental you call the landlord to fix things obviously. That's over when you own. If you are buying an older house start figuring out when things might break. But to start out aim for about $2,000. And as you use the funds, replace them. This is a slush fund with money coming in and out constantly. 

My parents generally did not give me an allowance, mostly because they could not afford to do so. I did learn, however, to be a careful spender and have always had savings, as I do today, nearing retirement when I expect to be a TSP millionaire, and my husband (who had to buy all his own clothing, etc., for m a very young age) is already retired and is a 401k millionaire. When we had children, we did not give an allowance, because we do not believe in paying children for the privilege of living at home, nor for doing chores they should do because they are provided shelter and food. On the other hand we bought for them what they needed, and they earned their own money selling aluminum cans to the recycling plant, selling home grown vegetables and Halloween pumpkins, and later cleaning my husband's office when he moved into a no-service building. We insisted that most go into a college fund for books and incidentals, which they would be required to pay. The biggest lesson we taught them: "Mom, I want that." "No." "But you can afford it." "It's not about whether I can afford it, it's about whether I want to spend my money on that." We only had to say that a few times. They are now responsible adults with good jobs, a house, children, and savings. It is not the money but the lessons that count.

Read Michelle's newsletter: Why giving your child a financial lesson may be better than an allowance

Good lessons for your kids. And as you point out and as I learned as the mom of three, it's not the allowance alone that teaches. It's the things you say and do that really matter. If you aren't going to put in the work to do as you did by requiring the kids to save or give to others an allowance because just a slush fund for them to shop. 

Whether you give an allowance or not the key is what financial life lessons are you teaching along with doling out the money. 

When my kids had to start to pay for things from the money they earned from their part-time jobs all of sudden they didn't need as much. 

Them: "Mom, can you buy me ...?"

Me: "Use your own money."

Them: "Never mind, I don't want it."

Me: "Praise be."

 

I have the book the World of Gloria Vanderbilt to send you, would say I have Gloria Vanderbilt jeans to send but wrong size. I always appreciated your sister girl advice for sure and I love that you finally made it on TV. Many thanks.

Read Michelle's column: Gloria Vanderbilt jeans made me feel good about myself

Thank you. I look for financial lessons in a lot of what I do and that has happened to me, which I hope will make learning about money relatable.  

Not a question, but really? I think I've heard everything now.

Read Michelle's columns:

Married to debt: Couples are taking out loans to pay for their weddings

I was floored when I read that people were taking out loans for a wedding. But then I really shouldn't be surprised. They put wedding costs on credit cards they can't pay off right away. Loan the same thing.

It's crazy to me. It's ONE day people!

Here's what I ask people who tell me they are "saving" for a big wedding.

-- Do you have an emergency fund?

-- Do you have a life happens fund?

-- Do you have any other debt and yes, I include a car loan. (I don't include a home loan).

-- Do you have student loans?

-- Are you saving for retirement?

-- If you have kids, do you have a college fund for them?

If you aren't taking care of business in these areas, I am NOT impressed that you are "saving" for a wedding. You are in fact, living beyond your means. 

 

I read the article today about wedding loans (LINK) and was absolutely stunned. I would love to read an article from you about this new trend. I am completely of the opinion that the couple plans the wedding that they can afford to fund. If families want to help, that's great. But, if you need to take out a loan to pay for a huge wedding, you should ask Michelle first. This is all separate from the "tradition" that the bride's father pays for the wedding - which is an unfortunate artifact from patriarchy. That's a discussion for another chat, probably.

Read Michelle's columns:

Married to debt: Couples are taking out loans to pay for their weddings

Your maid of honor is not made of cash

People talk to me first all the time. Some listen. Many don't. But I was so happy when I got one couple to cancel big wedding plans. Why?

-- They were already married.

-- They were trying to pay down more than $20,000 in debt so that they could borrow $40,000 to pay for the wedding.

-- When the couple realized how crazy it all was and told their family and friends guess what they said? "Oh, thank goodness!" Many were going to have to put out a lot of money to attend. The father of the bride, who was already a wife, was going had told them he would give them month to help except he really couldn't afford it. 

I was so proud that the couple listened and they are now well on their way to being debt-free except for their mortgage. 

Would you teach someone to drive without putting them behind the wheel? I've found that the best way to teach kids now to handle money is to put money in their hands and let them make decisions about how to spend it. Of course, they must also endure the consequences of the decisions they make. Simulate the real world for you kids as they are able to handle it. Going to school is their "job" and if they do it well, they should be paid well (for their age). No one will pay them to clean up after themselves or help around the house as adults, so they shouldn't be paid for it as kids. I started paying my kids for good grades in school when they entered 1st grade and then let them decide, entirely, how to spend the money. After that, Mom and Dad took care of the basics, but the kids were responsible for their discretionary spending, pretty much without limits. Basically, I felt like I was putting money in their hands that I would wind up giving them through being nagged into paying for things they wanted, anyway. I clearly remember trying to get my daughter, at the age of 6, to reward herself for her hard work by spending some of her first allowance payment on something fun. It was like pulling teeth. She had $60 in her hands and I told her she could do whatever she wanted with it, but there wouldn't be any more until her next report card. It was interesting to see how often both of my kids have decided not to buy something they thought they wanted when it had to come out of their own savings, rather than Mom and Dad's. Both of my kids have become very thrifty as teenagers and have built up sizeable next eggs over the years. A side effect is that we never argue over money. When they want something new, the answer is always the same: "It's your money. You earned it. Spend it how you like."

False equivalence. Operating a moving vehicle is not the same as buying candy with an allowance. Plus if you don't practice driving you could kill someone.

Here's the thing. Many, many people learn to be good money managers by not getting a allowance. I NEVER got one and well, I have a personal finance column for The Washington Post. Why? In part because I watched my grandmother Big Mama model good money management. She talked to me ALL the time about how to handle money -- save, shun debt, etc. If what you propose is true than those families who can't afford to put their kids on the payroll could never teach them about money. Just not the case.

But I will agree that when children do get money in their hands they often make decisions about how to spend it or not spend that will teach them about delayed gratification or not. Some kids get an allowance and still make very poor financial decisions. 

I believe the key was YOU. You clearly set an example, talked to them, etc. 

Allowance alone does not make good money managers. 

 

Is it advisable to use a HELOC to pay off back taxes that are already under a payment plan?

I'm not a fan for using a home equity line of credit for anything other than a big, necessary home improvement such as fixing your roof. 

Stick with the payment plan and do whatever you can to find extra funds to pay it off early. 

I feel like all these wedding articles always attract a host of smug commentators to say that the courthouse/ eloping is the ONLY REASONABLE way to go. This completely ignores that lots of people find meaning and significance in a religious wedding and/or that lots of people want to share important moments in their lives with the people who are meaningful to them. These two things can be done cheaply, expensively and everything in between and couples should be considerate of that. But wanting to do them is not an inherently bad thing to want.

It's not about being smug. It's that many of us see the results of bad financial decisions are just trying to get people to see that you can get married and NOT spend all that money if you don't have it and you are/have neglected other financial priorities. 

Besides what are we really talking about here? It is not the religious ceremony that is costing an arm and a leg. People can afford the church rental and preacher/priest/rabbi. It's the party they want to have afterwards. Why couldn't people just show up for the vital part of the day, wish the couple well and everybody go their merrily little way. Why is that not enough? Again, if you can't afford more.

It's like the repast after a funeral. Many families are increasingly not having a repast because they can't afford to feed everybody who attends the funeral. 

We want a lot of things. But the mature thing is to realize what you can afford do and do just that. 

Gloria Vanderbilt's most important lesson was her work ethic, which she herself practiced (although she could have led a life of the idle rich), and which she transmitted by example to her son Anderson Cooper.

I agree. And some news reports said she had never planned to leave her kids a trust fund for just that reason. I'm thinking about adjusting that issue in my Monday retirement newsletter. What do you think? Should parents leave their children a lot of money?

If the new home owner had an home inspection, I hope she reads the report. We found our report helpful in having some idea about the life span of appliances and other problems that may come up. Regular maintenance goes a long way toward the life of what is in your home. We know we are beyond the life span of our water heater--it appears to be true that when it is in regular use such as people at home all day and not employed outside the home it lasts longer; we went through two when we worked. Also while appliances do give out it is more likely you may deal with stopped up plumbing. In 37 years we have replaced our washer/dryer twice; our microwave--knock on wood--is much more than 15 years old; TV more than 10, etc.

Very good advice. 

Hi Ms. Singletary, My wife and I are 55 and have 7 yrs left on our 4% 15-yr fixed mortgage; remaning balance of ~$196K / monthly payment of ~$1450. Both kids are out of college. Should we pay off the mortgage from savings now and avoid ~$12K interest payments? No other debt. We are 401K paper-'millionaires' and we'd still have 6 figures in savings. Or should we put the savings we'd use to pay off the mortgage into something like CDs or something? We'd rather not expose that capital to risk in the stock market even though it could get higher returns. Would be grateful to read your advice. Thanks for your always great chats and columns.

If you have the other bases covered, which it appears you do, I would go for being debt-free. BUT...and that's a big BUT as long as you aren't draining your cash. I would never want anyone to be house rich and cash poor, meaning you have a lot of equity in your home but not much in savings. Plus, what do you really have to lose if this is "extra" money. You save $12,000 (that's a car) and you can still take that $1,450 you were planning to make in mortgage payments and save it to build right back up the money you take to pay the mortgage off. Besides if you aren't going to put that money in the  market keeping it in a savings account or CD isn't going to earn you much so why not get rid of 4% debt. 

I would pay it off.

When my children got married 5 years ago, I thought the amount they spent on their weddings was ridiculous, but it was not my money so I kept quiet, and our contribution was modest. This year a close relative married and as a guest traveling across the country to attend a wedding local to the participants, I spent probably $2K on accommodations, airfare, food, and other expenses. If this weren't such close family, I would have not gone. Luckily I can afford the extravagance and have a small family!

You are so right. Grown people get to spend their money the way they want. But nothing wrong with pointing out why it might not be wise -- at least I can since I'm a columnist. 

My husband and I are 70-ish, still living in the four-bedroom Colonial, good for younger people but not so much for aging knees, that we bought more than 30 years ago. Time to look for a condo or active-adult one-story living. Our finances are in good shape, but a lot of our retirement money is in the TSP, and we can't quickly withdraw a large sum from that should one of us suddenly need assisted living. Does it make sense at this age to take out a mortgage so that we could conserve more cash from the proceeds of selling our current house? We don't care if a new mortgage is ever paid off; no kids, so no worries about leaving an inheritance.

Or, could you sell your current home and use the money to buy a modest priced condo or one-level rancher? It's possible you could age in place with the help of long term are aides should the need arise. Or later, if there is a need, you could get a reverse mortgage on the smaller place and that would not require a mortgage payment until you move or pass away. 

Preach! Thank you for your article. I was maid of honor for a friend's wedding and the dress cost $400. It was really unflattering on me and it was too formal to wear anywhere else so I donated it after the wedding. The dress I got married in cost less than $100, and I've worn it multiple times since.

You are a good friend. Me, not a chance. Love you but nope. I don't think I've ever spent $400 on ANY dress, including my own wedding dress, which like you was about $100 bought from a consignment store. 

About incompetent govt. Your discussion last week. We filed our state taxes early then got another form so we had to amend the return. With the amended return we sent in the extra amount we owed. They sent it back telling us we didn't owe anything. We went on with our life. 6 or 9 months later we got a bill. For the money we owe in taxes *and the interest* we were told there was nothing we could do no matter how many hours on the phone I was with different people. It was maddening.

Wow. Just wow. But hopefully with the letter saying you didn't owe the first time you got the state to forgive the interest and penalty. Still. Crazy.

Ok, this is not going to give me a parent of the year award, but it worked for us. Starting in first grade, we gave our daughter a dollar for every A she got on her report card. This continued as a family tradition, that we all got a kick out of, all the way through college. Still was just a dollar for an A, but it made us all smile. Also, the summer after first grade, I gave her a nickel for every book she read. My husband was aghast, but boy did she read a lot of books that summer. She continues to be a voracious reader today.

I'm not mad at you. It worked. I didn't pay for grades because don't believe in that but also because I'm cheap. 

Look, ultimately if you raised a kid who didn't think she was entitled to money for doing with she was supposed to do no harm in your method. 

I learned early not to count on receiving an allowance. We were to receive a weekly allowance based on doing our chores. However my father would use any excuse to not give us our allowance. If you asked a question or made a comment he didn’t like he would say “ I am not giving you your allowance.” It was very frustrating. I learned to be quiet to avoid confrontation. One time my father was out ill from work and it was Easter. Being a teenagers my sister and I bought Easter baskets for our two youngest siblings. We were so proud of ourselves when our mother admonished us because we might of hurt my father’s feelings. Later in life I found out my parents were sending money to 3 of my adult siblings. I am glad I learned early to save money and budget for my needs. I was very goal oriented, worked my way through college and grad school. The lessons in life that were confusing to me when I was younger made me into a more responsible adult.

I'm so sorry your father was not a man of his word. Probably something in his backstory. 

But I love your attitude of using it as a lesson to do better and be better. Good for you.

I have a job I enjoy very much that keeps me from home 7:30-6:00; my husband has a part time job near home. I am very well compensated and the breadwinner. My daughter is eight and I am missing seeing more of her and she is missing me. I am considering looking for a job in the town I live in that would be a dramatic salary decrease. We would live comfortably, but no longer be sending large sums of money every month to a Roth IRA or 529. Telecommuting is not an option for my current job, and the community where I live just doesn’t have the same high paying jobs as does the city where I work. What factors should I consider as weigh this decision? Thank you.

I'm a big believer in making adjustments so that family comes first. Now, having said that if you decide to change jobs I would first really scour your budget to see where you can cut expenses. I'm afraid you still need to save for retirement and would love for you to continue on the path to save in the 529 college fund. But that might me other sacrifices such as staycations (as opposed to expensive vacations every year). It might mean cutting cable or maybe your husband and get a full-time job or pick up hours at another part-time job that would still allow for the family things you want to do. 

It also might mean you decide that you're going to have to work longer rather than perhaps an early retirement. 

But I think it all can be done if you change your expectations on some things that don't matter as much as being their for your daughter. 

Single guy here. When did it become the custom for bridezillas to dictate that the women in their wedding party -- presumably their closest friends and relatives -- should have to spend ridiculous amounts of money on funny-looking, ill-fitting, one-use-only dresses? Why can't brides just ask their party to wear what they would wear to any "dress-up" social event, maybe specifying no white or black?

Smart single guy. Couldn't agree more! 

I agree wholeheartedly with your views on the topic. However, I've encountered brides whose attitude is more or less, "You have to meet your social obligations." Luckily, I opted out of the mindset young, but some never get over it, and hand it down to subsequent generations.

In such situation, just decline to be part of the wedding party. And it's okay. It's also an honor to be a guest!

But can I say this. Please stop saying "it's my day." If that were the case why then do you need all these people to come? If it's about sharing the day than be considerate of the financial obligations you are putting on the wedding party and guests if you aren't paying for everything. 

 

Do you agree with the Dave Ramsey model for getting out of debt? I can not get behind it because he suggests that you stop saving for retirement in order to pay off your debts. Shouldn't you still be planning for your future in addition to paying down debt?

I actually am a fan of Dave Ramsey and I have also suggested some folks stop contributing to retirement to get out of massive consumer debt. Because, it makes no sense to me to be paying 15%, 17% or 29% in interest payments on debt when over time the stock market returns about 8% (and 5% to 6% in certain periods).

Now, if you can keep to an aggressive plan to get out of debt and save for retirement that's great. Or put in enough to your retirement plan to get any company match and then stop.

Dave and I just see a lot of people being swallowed by debt and then end up borrowing or taking withdrawals from their retirement plan anyway.  

Good gravy....apparently having any kind of aesthetic desire for an important life event is just over the top and unreasonable. I'd be curious to see if his future spouse (if there will ever be one) agrees.

That is not what he said. And it's not what any of us who object to all this spending are saying.

What we are saying is poll the people in your party. See what they can afford or even like. If getting those matching dresses, which frankly are rarely as cute as the bride thinks is going to stress folks out financially let them wear something they already have. I mean really are the guest really going to say, "Wow, where are the matching ugly, ill-fitting bridesmaid dresses?" 

We got married 18 years ago. I told the groomsmen to wear their own tuxes as long as they were black, plain white shirt, regular bow tie. Wife told bridesmaids any black dress as long as it was below the knees and covered the shoulder (requirements at the sanctuary). If they had dresses that worked, great. If they needed to buy something, it was something they could wear again.

Perfect. Considerate. Well done.

Every time I read something about destination bachelorette parties and brides demanding all their bridesmaids get their hair and makeup done somewhere specific and pricey, I thank my two best friends for being so low-key. One's family bought my bridesmaid dress, the other gave me a gift card to the store to help with the cost (and just picked a color instead of a specific style). Going home for the weddings gave me the chance to see my family, too.

Good friend.

I was the opposite of most people, I didn't want a big wedding. We owned a condo together, were living together, and just didn't see the point. We were overruled by our parents who insisted that we have a big wedding and they were paying for it. I did my best to keep costs down, but it was still around $10,000 (almost 18 years ago). Two weeks before the wedding, my mom said to me "We should have just given you them money instead of this madness." I did get the deal of the year on my bridesmaid's dresses - I found them on clearance for $37.50 (plus tax). Found three in the sizes needed, and mailed them to my friends. Knowing how little I paid for them, no one cared what happened to them during or after the wedding. Everyone had a good time, but I do wish we'd just gone to the court house to get married!

Lesson learned. Live your truth!

For the first time in my life, I owed taxes. I set up a payment plan. Then the IRS sent me a notice saying it was going to be $225 to have an installment plan to pay less than $500 in taxes. I used the money from my life happens fund and am moving on. Shameful!

 This is why having a life happens fund is a wise move.

Ric Edelman and numerous others have explained why keeping a low-interest mortgage and investing your savings is smarter than paying it off. With regard to the previous poster, the investment choice is not just tech stocks vs. a bank CD. He could invest conservatively in bond funds that would pay a return to at least cover his mortgage expenses, he would keep whatever tax benefits he's getting from his mortgage, and he would maintain the liquidity of his savings in case of an emergency. What's wrong with that thinking?

I respect and really like Ric. But who are these people telling folks to keep a mortgage?

People who stand to make money if you invest rather than become debt free.

The key to not overspending as a wedding guest is to plan well in advance. I set certain parameters several years ago that I follow to this day. I will rarely travel for a wedding. Unless it’s a blood relative, I’m pretty happy to skip it. I will, however, send a gift, but a set a limit on what I will spend, usually $100 total for a shower gift and a wedding gift, divided in whatever way makes sense. A few years ago, I was invited to a bridal shower for a co-worker. The shower was a tea at a local hotel, during the work day. Going to it would have meant using a few hours of vacation time, buying a gift, AND paying nearly $40 for the tea. That seemed like too much time and money to me. Then I reflected on the fact that although I truly liked this co-worker, I hadn’t known that she was engaged until I got the invitation. If I didn’t know her well enough to know that, I decided that I could easily decline the invitation, and did so.

Sounds reasonable to me. And for the record, I believe it's important to show up at events, etc.

But with so many demands on our time and money, you have to set up rules or parameters so that you don't over extend yourself.

For example, I wrote a column about "guests don't pay." I will not attend a celebration if I have to pay to be your guest. Love you, but not coming. Because if you're hosting, you don't ask your guest to pay for the party.

When my nephew was born I was shocked by the amount of money spent by friends and family on showers/parties, gifts, etc. He was the first grandkid but amount of crap he and his parents didn't need but got was astounding. Instead I set up a custodial bank accound for him and put what I would have spent on gifts/parties in the account. When others in the family heard about it they asked to participate too. He turns three later this month and the account already has a little over a thousand dollars in it. It makes me glad I didn't give into the pressure of the events.

Wow. Wonderful.

one thing I notice is that those who recommend having a simple courthouse wedding or cake and punch often have already had their own large wedding reception with all the perks. If they had a wedding reception, they should understand that others want one too. Similar to those who wear name brand purse or shoes and when you compliment them, they say "oh you can get something like it at Target!"

Just live your financial truth. 

I like Warren Buffet's line about what to leave your kids, "Leave them enough to do something, but not so much that they do nothing."

My husband loves that quote too.

I understand the fear that if you leave lots of money to your children they could become layabouts. But you need to teach them that lesson before they are grown. (I'm assuming that they are adults at the time of your death; otherwise of course you should use a trust or something to make sure they go to college and so on.) If you are fortunate enough to have a sizable estate, there's no harm in leaving money to children, along with some charitable enterprises.

I agree.

got paid for grades. They would do the bare minimum it took to get the pay out. I remember one girl grilling a history teacher, "If you ask [x] and we respond with [y] will we get full credit?" It seemed to take every bit of joy of learning out of the equation and reading became a chore to be only undertaken when a grade was at stake. Bleh. My mom made sure that I got copies of the really good books that were on our reading lists the summer before so I could enjoy them first without having to worry about a grade on a test or an essay. Guess who graduated 2nd in her class? Yeah, not any of the paid for grades kids.

There is a downside to paying for grades. If you plan to do it or are doing it just be sure your kid can still perform/act well without a payout.

Yes, the idea is to use a large chunk of the proceeds from our current home to buy a condo. Northern VA prices being what they are, a good, safe condo with the services that would support aging in place would use up about 75% of what we would get for our house, including a reserve fund of $100,000 to cover the monthly condo fees for several years. No desire to have another house, even a modest rancher, because no desire to be committed to yard work, maintenance, etc. If we got a mortgage for roughly 30% of the condo's value, mortgage payment would be affordable and we would have a healthy cash reserve if need be for sudden medical expenses, etc. Both my husband and I come from long-lived families so we want to protect against high end-of-life expenses (which could go on for some 10 years or more, potentially, in nursing or assisted living). Reverse mortgages are expensive and possibly predatory; want to stay away from that idea if at all possible.

My answer is the same. I wouldn't get a mortgage. And with a HUD approved counseling agency you can find a good reverse mortgage should the need arise. 

Aw, c'mon, who does that? Was this some kind of "recommitment ceremony" or anniversary party? Did they get married secretly and now wanted a public event? Or what? Please dish.

He had been married previously. To save money they didn't have a wedding, honeymoon, etc.

It was/is her first marriage and because of a tough childhood she really wanted the big wedding. I understood the motivation. But I got her and her husband to realize they didn't need the wedding for her to be fulfilled. 

Sorry. Stayed as long as I could but have to start working on another column.

Thank you for all your comments and questions. I promise you that I read everything. And look for my newsletters and columns because I may use your question in those forums. 

Take care and see you next week. 

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Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

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