Weddings formally celebrate the nuptial partnership between two people. However, the cost of wedding parties can significantly impact the new coupleâ€™s financial health. Wedding parties can grow into major productions from catering (food) to entertainment (music). Each spending category comes with upgrade options, which quickly escalates overall wedding cost. According to a wedding website TheKnot.com that surveyed 17500 couples, the average cost for a wedding was $28,427 in 2012 in the United States. In the United Kingdom, a similar survey by You & Your Wedding Magazine showed that a wedding cost couples Â£22,000 in 2012.
Expensive Weddings: A Problem of Irrational Behavior Economics
When I attended weddings as a little girl, I remember the wedding highlight was the banquet that followed the wedding ceremony, when bride and groom would toast guests at each table and we kids finally get to eat! Now? We have grown used to televised, extravagant wedding parties that shifts our perception of what we should “normally expect” from weddings: we have learned to expect multimedia productions with slide shows, choreographed dances, and exotic parting gifts for guests.
When it comes to weddings, we experience pressures from social norms: we attend our peers’ weddings and begin to form arbitrary ideas about what we should be willing to pay for a wedding. We are further colored by our emotions toward what should be “the happiest day in a couple’s life” (next to becoming parents).
Scale of Problem Behavior
When we consider that:
(1) Money is a cause of many arguments between married couples,
(2) Debt is a precursor to additional, vicious cycling financial problems, and
(3) Young people often already hold education debt (student loans) and may be unemployed or underemployed
— We can appreciate how the happiest day of a newly married couple’s life may quickly transform into heavy financial burdens for the young couple if they paid for the wedding — or for their elderly parents if they had to borrow money (assume new debt) or withdraw from retirement funds to pay for a wedding production.
A Research-Based Wedding Financial Protection Plan
First, use both credit cards and cash — but strategically. Since credit cards remove our “pain of payment”, we may be more likely to deviate from the wedding financial plan and engage in impulse purchases, just as shoppers using credit cards bought junk food on impulse [Thomas et al. (2011). How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices. Journal of Consumer Research, 38(1), 126-139.] Existing experimental research relevant to psychological intensity have shown that we may be more willing to say “yes” to a $1000 upgrade when we are already paying $10000 for a wedding party. If we are reminded of what other uses we may assign to this $1000, such as saving toward the down payment for a house, we may avoid such opportunity cost neglect [Frederick et al. (2009). Opportunity Cost Neglect. Journal of Consumer Research, 36(4), 553-561.]
Therefore, use credit card to pay for basics like renting a location and buying the dress, but use cash for any upgrades that are offered by wedding service providers.
Second, create a personal arbitrary anchor around wedding cost. Engaged couples may be familiar with the marketing tactic of jewelers that say “a wedding ring should cost 3 times a monthly salary”. They can use the same logic to create a new anchor for their wedding budget, for example, by deciding that the wedding should cost 5 times – and not more – the couple’s monthly salary. Existing experimental research has shown that people tend to assign arbitrary values of how much they are willing to pay for something [Ariely & Norton. (2008). How actions create-not just reveal-preferences. Trends in Cognitive Sciences, 12(1).] — therefore, setting their own arbitrary anchor allows engaged couples to have a framework to make financial decisions around the wedding party.
Third, create a â€œmemorable endingâ€, not a “memorable wedding”! This is perhaps the most powerful research-based strategy. Several studies have shown that how an event ends is more important than the entire duration of the event in people’s minds [Tetlock & Mellers. (2002). The great rationality debate. Psychological Science, 13(1), 94-99]. When you create a memorable “ending”, the guests will be more inclined to remember your entire wedding as “memorable”!
In conclusion, I don’t expect that couples will elope like I did (I was a poor graduate student when I got married), but these 3 research-based ideas may help a young couple have a memorable wedding event within their wedding budget.