PLANNING / How to Set a Wedding Budget

How to Set a Wedding Budget

Your wedding is likely to be one of the most important days of your life. While the day itself should be as relaxed as possible, a lot of time, money and effort goes into making sure that is possible. The cost of living is impacting prices across the board, and wedding suppliers are no exception. For those saving for a wedding and gearing up for their big day. Here are some of our top tips for creating their wedding budget for that important day.

Set a budget early

The average wedding in 2024 costs £20,000, so it is understandable that you may feel overwhelmed or stressed when you begin the planning process. With many already feeling the impact and financial pressures of the cost-of-living crisis, having realistic expectations, and putting a strict budget in place have never been more important.

For anyone planning their big day, start by having the conversation early on with your partner and any other family members who may be contributing. This will help you to establish your budget and therefore help guide decision-making early on. It can be easy to get carried away so setting boundaries with a budget is key.

Start a separate savings pot

As with all large life events and expected costs, the sooner you start saving and putting money aside, the better. 40% of couples spend between 12-24 months planning their wedding, providing a reasonable amount of time to cover all costs and tick wedding essentials off your checklist.^[2]

Setting up a separate bank account, or even a joint savings account, can help provide you with a clear view on how much money you’ve already saved and the contributions you and your partner are making. This insight will enable you to identify whether you’re on track to reach the funds needed for your wedding or whether you need to adjust your spending or increase the amount you are saving. And with interest rates rising on savings accounts, the returns you could earn will help your money grow as you save for the big day.

Consider your priorities

Weddings are a bit like a jigsaw, with various aspects to plan for and pull together. Start by creating a checklist for all the essentials you’ll need to account for and another for all the extra nice bits and bobs, (non-essentials). Then it is also worth having a conversation with your partner to establish what areas you’d like to prioritise in terms of your spending.

Every couple is different and therefore the various components of a wedding will hold different levels of significance or importance for each couple. Whereas one couple may value a top-of-the-range photographer, another may prioritise an enormous wedding cake.

If you agree your priorities, you can then spend time shopping around and researching cost-effective options when organising those non-priority components. Likewise, whilst some may hold the idea of a large wedding with an extensive guest list close to their heart, it is worth keeping in mind your budget when creating the guest list.

Understand who is contributing

It may be the case that your nearest and dearest would like to offer a helping hand and contribute financially to your wedding. With these friends and relatives, it’s important not to shy away from discussing the logistics and the best way for all to approach such contributions. Currently, gifts received from an individual within seven years of them passing away may be subject to inheritance tax. However, each tax year individuals have different allowances they can use to give tax-free gifts. Most commonly known as the ‘annual gift exemption’, everyone is entitled to give as much as £3,000 each year without the seven-year rule applying. This allowance also gives you a one-off ability to carry forward any unused annual exemption from the previous tax year.

The wedding gift allowance is another useful tactic for family members and friends to consider. Each tax year, depending on the relationship, individuals can give a tax-free gift to someone getting married. For parents the maximum amount each parent can give a child getting married while being exempt from inheritance tax is £5,000. However, with a bit of forward-thinking, a parent planning for a child’s wedding can utilise and combine both their annual exemption and wedding gift allowances. This means a parent with an unused annual exemption the year before could potentially give as much as £11,000 each tax-free to a child getting married. Each grandparent can give up to £2,500 and any other person can give up to £1,000 under this exemption. To be effective for inheritance tax purposes, the gift has to be made either on or before the date of the wedding ceremony.

Remember your future

While it’s easy to focus your attention solely on the short term, it’s important to keep in mind the reality that once you say your vows and swap rings, you and your partner have a whole future ahead of you. When planning your wedding try not to shoot your future selves in the foot by overlooking the need to financially plan and prioritise your post-wedding lives.

Once the decorations are down and the honeymoon is over, you don’t want the start of your new life together to be characterised by financial stress and regret. In addition to all of your planning and discussion around wedding finances, it would be a good idea to also think about your long-term financial goals and how you plan on achieving these together.