What is more important to you: a cool party or a dip in the hot housing market?
This is a question from a recent Netflix show, Marriage or mortgageposing for a select few residents of Nashville, Tennessee.
In each episode, the couple must choose: invest a lot of money for the wedding or make a down payment?
But does this important decision not overlook other important financial considerations as a choice between practical and romantic?
We asked some financial advisors how they would advise you to choose between buying a housethrowing the wedding and everything else in between.
Here’s what they said.
How to make a responsible choice
Deciding how to spend your savings, no matter how much you have, can be overwhelming.
Brent Weiss, Co-Founder and Chief Evangelist of Facet Wealth, advises his clients when they have an important decision to make is to step back and rethink their choice, keeping three themes in mind:
What are your values? How does this solution fit them?
Which picture is wider? Do you have other goals that you missed?
Ignore the noise and go back to your values. Get out of social media, forget about FOMO (fear of missing out) and return to your values.
“One of the first assignments I give new clients is the period between meeting number one and meeting number two, I ask them to come back and define what success looks like for them if we sit here three or five years after today. “.
This usually reveals a number of other priorities that couples overlook when making emotionally charged decisions, such as buying a house or getting married.
What other financial priorities should you consider?
In fact, neither buying a home nor getting married is necessarily a smart investment. Especially when you consider what you can do with tens of thousands of dollars by investing them.
Weiss quoted the numbers: “Suppose a couple spent $ 30,000 on a wedding. So I asked myself, “What if they did it for $ 15,000, and they took that $ 15,000 and invested?” “
“Assuming a normal rate of return, it’s not just $ 15,000, but actually $ 150,000 or $ 200,000 in 20 or 30 years. This is really what the money is really worth. “
With this in mind, we asked Weiss; Dan Demian, financial advisor to Albert; and Tom Mingone, Equitable Advisors, on other priorities to consider before throwing money at a wedding. or advance payment.
Establishing an emergency fund is an important first step.
Mingone says he usually recommends setting aside living expenses for at least three to six months.
And you’d be better off putting your money in a high yielding savings account where it can continue to grow, rather than just sitting in the bank.
“If you have high-interest debt, such as credit cards, you shouldn’t rush into making any decisions, be it a cash injection for a wedding or a cash down payment injection,” says Demian.
Especially when it comes to high interest credit card balances, you should consider low interest debt consolidation loan to help you knock out your balance.
And keep in mind that the lump sum you spend on a wedding or down payment can save you thousands of dollars in interest in the long run and on other types of debt.
“It might be worth taking whatever extra money you have and reducing your student loan debt,” says Demian. “This will free up more space in your budget and help you save more money to reach your goals later.”
“After paying with your credit cards and creating an emergency fund, you can focus more on long-term goals like retirement,” says Mingone.
When you invest in retirement, compound interest will be on your side.
“This means that if you start earlier, your money can grow much longer,” says Demian.
“If you neglect your retirement account and decide to throw a party or buy a house when it doesn’t have to be, it will really lessen these aggravating effects for you.”
How to get it all
Each of the advisers stressed that is an it is possible to have it all. But this requires planning, certain sacrifices and a serious reflection on your values.
And if you need a little more space in your budget right now To achieve all of your financial goals, you have several options.
Reduce your insurance premiums. When was the last time you searched for the best auto insurance price? If it was a long time ago, it could cost you over $ 1,000 a year. Shop around to make sure you pay at the best possible rate… And while you are doing this, use the same technique to save hundreds on health insurance, also.
Save like a pro. Even if you are on a budget, you still have to stock up on supplies from time to time. And when that time comes use a free browser extension which will search websites for the best prices and coupons so you never overpay again.
Turn your pennies into a portfolio. Investing doesn’t require huge sums of money or fluency in Wall Street jargon. With one popular app, you can automatically invest your “little things” without stretching your limited budget.