Ask Dr. Don By Don Taylor, Ph.D., CFA • Bankrate.com

Budgeting for wedding bells

Dear Dr. Don,
I am getting married next August. My fiancee and I both come from large families, so we know that we're having a big wedding. We've both taken second jobs to cover the wedding's cost and to diminish our debts.

We estimate spending $25,000-$30,000 on the event. We both own homes and have about $6,000 in credit card debt between us. She owns her car while I still make payments of about $170 a month. Our combined annual income is over $60,000 and we live in Georgia.

I've considered opening a wedding account for us to pool some of our income to pay off expenses. Plus, any family members who wish to contribute can make a deposit as well. I have two questions. First, what would be the best option for a wedding account? Second, what would you consider the best approach for savings and investment following the wedding?
Thank you,
Joseph Jointly

Dear Joseph,
Congratulations to you and best wishes to your fiancee. The steps the two of you are taking to get a handle on both paying for the wedding and whittling down your outstanding credit balances prior to getting married are smart moves.

The average cost of a wedding in America is between $18,000 and $21,000, according to Bride's magazine. If you haven't done it already, spend some time putting together a budget for the wedding. There's a lot of advice available on how to trim costs without looking like you're cutting corners. Bankrate weighs in with a Guide to weddings and finances that includes a feature showing the Top 10 ways to save money on your wedding.

I like your idea of opening a separate account to accumulate the savings that will pay for your wedding expenses. But suggesting to family members that a deposit into the account would be welcome is over the top. If family members, without any prompting by you, volunteer to help defray part of your wedding expenses then you can deposit that money yourself. There's no way to put the right spin on announcing the availability of a wedding account along with the account number for the family's convenience in depositing funds.

With such a short time before you need the money and given the low interest rates currently available, there's no real advantage to aggressively chasing rates for these deposits. Just put it in a money market account so it will be both safe and available. You can find rates in your area for money market accounts using Bankrate's market surveys.

Since you won't need two houses come next September, discuss where you're going to live as a couple and how you're going to treat the proceeds on the sale of one or both of your current residences.

After you've paid off the wedding expenses, don't just look to bank accounts for your investment choices. Diversify between stocks, bonds and cash investments as you invest for long-term and intermediate-term financial goals.

-- Updated: June 12, 2003