Eye View Personal Finance.
Here are seven financial messages for would-be brides, grooms—and their parents.
1. The wedding-industrial will not die. “We’re in a recession-resistant industry,” says Carley Roney, editor-in-chief of Knot Inc.’s TheKnot, the weddings website. The company’s data suggest that the price of the median wedding, which dropped from $19,000 to $17,500 from 2008 to 2009, has now stabilized this year unlike the housing market.
2. Spending a fortune on a wedding is a choice, not a necessity. Chelsea’s wedding is likely to cost $2 million to $3 million, says Ms. Roney. But first daughter Jenna Bush managed to hold a somewhat quieter affair for a lot less when she got married two years ago. She invited about 200 guests and held the wedding on her parents’ ranch in Texas. It was hardly cheap, but at $100,000, the tab wasn’t even in the same ballpark.
3. Spend what you can afford. Sure, the Clintons are spending a lot, but they are rich. Their net worth was estimated at $35 million not long ago. Chelsea is their only child. And Bill gets paid about $250,000 a speech. After taxes, that’s about $160,000. So he could clear a $3 million tab for Chelsea’s big day with 19 speeches during the wedding alone..
4. Look at the hourly costs. For Chelsea’s event, if the ceremony starts at 6 p.m. and the guests party into the small hours, the whole affair may last maybe 11 hours. For $3 million, that’s $270,000 an hour. How much fun can anyone have in an hour? Even if you’re, say, doing the tango with Oprah Winfrey? Look at the numbers for a regular wedding. A $17,500 event that lasts 11 hours is costing you about $1,500 an hour. If it lasts only, say, six hours, you’re spending nearly $3,000 an hour. Look how great a one hour wedding would be… Enjoy.
5. The lifetime cost will make you sick. People get angry when I point this out. But if your money earns, say, 4% a year above inflation, every dollar you save at age 20 will grow to about $6 by the time you retire. So that $17,500 will grow to about $100,000. And we’ve seen what can happen to jobs and wages in a slump. In these circumstances, saving money instead of spending it matters very much.
6. You might—possibly—be able to profit from others’ extravagance. For those who still play the market, Knot Inc. may be of speculative interest. With its stock trading at $8, the company’s entire market value is down to $270 million. It has about $130 million of cash and equivalents and no debt. Operating cash flow last year was $12 million. Results are due next week. One to watch.
7. How do you cut costs and still have a great wedding? Avoid Saturdays and peak seasons, says Ms. Roney. Avoid fancy venues and big cities. Make it more casual: A lot of the money goes toward those big formal dinners. And invite fewer guests. Five hundred people is going to cost you, even if they’re not famous. Go for a twilight or matinee wedding…
Bottom line? Jenna Bush is smarter than Chelsea Clinton.