These days, more couples are asking for cash instead of traditional wedding gifts such as coffee makers and toasters. What used to be considered bad etiquette has become so mainstream that you can find an array of cash registries where couples can ask for money from their guests. If you are newlyweds who find yourselves with a large stash of cash after your wedding is over, you’ll need to figure out together what to do with it. Instead of blowing your wedding gift money on extravagances, you can be a bit more financially savvy with these smart ideas.
Pay Off Your High-Interest Debt
According to Debt.org, seven out of 10 Americans enter into marriage with debt. If either of you has accumulated debt, the smartest thing to do with any monetary wedding gifts is to put that money toward credit card bills, loans, or other obligations with the highest interest rate. Paying off as much of your debt as you can help get your marriage off on the right financial foot.
Spend Only a Small Portion
No one says that you shouldn’t spend a dime of your wedding cash. However, it’s best to set a limit. You can decide before the wedding whether you want that to be a flat amount or a low percentage of all the money you receive. Whatever figure you decide on, it’s important to stick to it. Even small splurges can be fun for newlyweds.
Buy Insurance for Peace of Mind
Purchasing life insurance or final expense insurance might seem like a morbid idea, but it’s prudent. Consider investing in insurance to cover the costs that your spouse will face after your death, including medical bills, funeral expenses, and burial costs. Typically, the younger you are, the lower your premiums will be. Research about the different types of insurance available in your area that can help relieve your spouse of financial stress should you pass away.
Put It Toward Your Retirement
When you get married, you need to start thinking of your long-term plans together – and that includes retirement. If you haven’t maxed out your retirement account this year, you can add more money to it from your paycheck and then “repay” yourself from your wedding moola. This way, you can take advantage of the pretax contributions. If you don’t have a 401(k), IRA, or another retirement account, it might be a good time to open one jointly with your new spouse. The earlier you start contributing, the more years your money will have to grow. Do your research and learn about contribution limits, costs, and other details regarding different types of accounts to determine which retirement vehicle is the best option for you.
Save It for the Future
Although your wedding cash might not be enough to purchase a new car or put the full down payment on buying a house, you can save the money for one of those opportunities down the line. If you are satisfied with your current home and vehicle, you can put the money into an emergency fund for unexpected expenses. Many financial experts recommend having three to six months of expenses tucked away for emergencies, such as job loss.
If you find yourselves with envelopes full of cash and checks after your wedding day, don’t be tempted to blow all the money on a pricey honeymoon or other luxury items. Instead, start your marriage off right financially by making a smart choice to pay off debts, start saving for the future, or make wise investments.
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