2018 is going to be a big year for love and marriage in Australia – if you’ve found the one, congratulations! But what’s next – a home or a wedding?
It’s a common scenario facing many couples – do you prioritise the wedding over the home, buy the home first and get married later, or save for both at the same time? The answer depends on your own personal preferences, financial situation and goals. Here are some useful tips to help you decide and maybe get there sooner.
Ensure you and your partner are on the same page
Money matters are a common cause of stress in any relationship, so it pays to ensure you’re both on the same page about your finances. Discuss your short-term and long-term goals, and set your priorities together. It’s important to be open and transparent about your income and debts, so that you can work to make the most of your finances – and to help make your wedding and home ownership goals a reality. Talking about merging your credit cards and bank accounts to save money on interest and fees, is a great place to start.
Create a budget
Sit down with your partner and put together a budget and set some goals. Work out how to make the most of your joint income. You may like to seek advice from your financial planner about your long-term finances, but in the short-term there are plenty of tools around to help you budget and save, including budgeting apps. We like the simplicity of TrackMySPEND available on the ASIC MoneySmart website, or you can go online and find one designed for couples.
Establish a savings plan
Set measurable goals and be prepared to make a few lifestyle adjustments to save, save, save. That may mean axing your gym membership, cutting back on restaurant meals and finding free entertainment. It’s easy when you’re in love and all you want to do is spend your time together – so pack a picnic or go for a romantic walk on the beach!
You may also like to chat with us about setting realistic savings goals and planning how much you need to save for your wedding and home deposit. Establishing good savings habits will not only help you save more quickly, it will also hold you in good stead when it comes to applying for a home loan and paying back a mortgage. We can also help you set your budget and savings plan!
Be willing to compromise
You may have always dreamed of a lavish 250-head fairy-tale wedding with doves, drone photography and a 10-piece orchestra, but the reality is it may not be financially viable, especially if you’re saving for a home deposit at the same. The average cost of a wedding in Australia is now $65,482, according to a survey run by Bride to Be magazine, but the big day can be as inexpensive as you like. You may decide to opt for a more simple affair, so that you can channel the rest of your savings into a home. At the end of the day, it’s about you and your partner committing to each other – that’s the bit that matters!
Consider buying your home first
For some couples, buying your home first could make sense financially. Once you’re on the property ladder, you can save by making extra home loan repayments to build equity in your home. (When you save money in a savings account, you pay tax on the interest – which could mean it takes longer to save the amount you need).
The potential for your home to grow in value could also help you build up your equity. Once you have enough equity in your home, you can talk with us about refinancing your home loan and potentially withdrawing some of the equity to pay for your wedding. It’s a strategy that might not work for everyone, so do talk to us to see if it could work for you.