The average cost of a wedding in Ireland typically falls between €25,000 and €36,000
THERE was a study carried out by two economic professors, Andrew M. Francis and Hugo M. Mialon at Emory University in Atlanta Georgia. They analysed data from 3,000 married or once-married couples, where they sought to and I quote, evaluate the association between wedding spending and marriage duration.
And as they discovered, the length of a marriage amongst those they spoke to was indirectly related to the money they spent on their weddings. They discovered for example that if an engagement ring cost over $20,000, that couple were 3.5 times more likely to get divorced than couples whose engagement ring was in the $5,000 to $10,000 range.
And they also found that those who spent $2,000 to $4,000 on their partner's ring were 1.5 times more likely to get divorced than those who spent between $500 and $2,000.
This is obviously a survey based on people in the USA and I don't think there has been any similar study conducted in Ireland but I thought it was interesting and I wanted to tell you about it, because it leads me nicely to what I really want to talk to you about.
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But before I do, let me ask you a question. How much should you pay for an engagement ring? One month's salary? Maybe two?
Back in the 1930's, in an effort to sell more diamonds and increase profits the diamond giant, De Beers, suggested that a man should spend the equivalent of three month's salary on an engagement ring for his bride to be. I've read that the average price of an engagement ring in Ireland is €3,600 but I've seen other posts where some are suggesting it could be as much as €6,000.
And an engagement ring should be special, no doubt about it but spending a considerable amount, if not all of someone's savings, or worse getting into debt for the sake of a ring is asking for trouble.
My rule of thumb for what's it worth is that I have none. My advice is to simply spend what you can afford to without getting yourself into too much debt or using up all of your savings. Because those savings could be used and needed for a bigger deposit on a house or later when you are actually married. Which leads me to what my core message in this article is about.
If you want to have a better chance of a successful marriage today, I think you need to start off with on a good solid financial base and to achieve this you should probably do the exact opposite to what everyone else is doing. And I say this from my encounters with couples who are under considerable financial pressure which is putting a strain on their marriage, or on their health and their quality of life.
Research actually backs up what I've just said because for the last 20 years, the number one reason that has topped the charts for divorce or marital disharmony has been conflicts over money. Some of the other reasons by the way are sex, communication and the in-laws.
I want to quickly tell you about an encounter I had earlier this year with a gentleman who asked to see me because he was looking for financial advice. Over the course of our conversation he was telling me how financially insecure he felt because he had no savings whatsoever. He was always in his overdraft at the end of each month and he was paying €500 each month towards a term loan with his bank and that still had 5 years to run. His wife had a credit card balance with €8,000 outstanding and worst of all because their finances were so bad, his elderly father was paying the crèche fees each month for their only child.
But here was the thing that surprised me. He firmly believes and he's probably right, the reason why they aren't in a great place is because of two things. The first is what he did before they got married and the second reason is what his wife didn't tell him.
You see they were madly in love and it was a bit of a world wind romance and they were married within 12 months of first meeting one another. And to display his affection at the time in the biggest and most generous way possible, he used up all of his savings and even borrowed some money to buy his wife to be an engagement ring. I didn't ask him how much the ring cost but I can only assume it was very expensive.
He admitted that he wasn't thinking rationally at the time about how expensive the ring was, he just wanted the best for his bride to be and he thought the savings would be re-built and the debt cleared over time.
Her role in their financial woes was that she didn't tell him before they married that she was carrying a credit card debt at the time of €11,000.
It seemed to both of them that their individual financial situations were not a major concern or worry for either and when they were married they would deal with them together. He said, if I asked her about her finances and what debt she had, it would have been like asking for a pre-nuptial. He said to me and I wrote it down to make sure I remembered it, I didn't want to burst the love bubble we were in.
Interestingly, and I will get back to their story in a second, I wanted to tell you some interesting facts from various studies before I forget them about what people keep from their significant other:
-32% of women said they have hidden purchases from their partner, compared with 17% of men
-More than 25% of women said they would pretend something was old when in fact it was a new purchase , compared with 8% of men doing the same thing
-71% of men and women earning more than €70,000 have money secrets and 13% of this percentage is hiding debt
Okay, back to the couple.
He admitted their love bubble has deflated quite a lot in the past couple of years and I think is about to burst because not only are their finances a mess they're both under considerable stress at work also and that combination has greatly affected their relationship. So, what are the lessons I've learned from this couple that I can pass on?
Well the first is that before you ever say I do for the first or second time, I'd recommend that you have a conversation with each other, where you sit down and discuss your current financial situation i.e. what you have and what you haven't. Don't be ashamed of your past or the mistakes you might have made, just be honest.
And there are some basic questions that you need to talk about and they are, have you any debt and if so how much? If you have, how is it going to be paid off? How will we handle our money? How much in savings do you have? Who's going to manage our bills? Are we going to have separate accounts or just one? And should we have a joint budget?
And I personally think you should and it's a great exercise to carry out a trial run before any wedding because it shows both of you what you are going to be up against and what your outgoings are going to be each month. And even if one person ends up handling most of the bill paying, the other spouse needs to have some idea and input into what's going on.
And finally, please try and avoid any unnecessary debt if you can, before and after you are married. And that includes not getting into debt because of expensive engagement rings. Don't feel pressurised into believing you have to buy a ring based on what others do and say.
And don't forget the money you spend on loans, one of which could be for a ring, could be used to getting a bigger deposit on a house, which means lower monthly repayments, or using the money towards your emergency savings or your retirement fund or towards the expense of children if that was to happen.
Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at [email protected] or www.harmonics.ie