The Expert: Bill Moran
Merrill Lynch senior vice president and senior financial analyst
Okay, Bill, let’s say a client has come to you who has just gotten engaged. Where do you begin?
My budget advice would be the same as my marriage advice: Keep the lines of communication open at all times. Talk about your goals and aspirations, what you imagine things looking like for the wedding, and decide what each of you wants most from the day. The couple will also need to decide how much emphasis (and money) they want to place on this one day, versus other goals they may have for their future together, like buying a home or starting a retirement fund. We will also need to discuss where they individually stand financially, so we can figure out where they stand as a collective unit.
What are some potential pitfalls couples need to watch out for when it comes to planning a wedding?
The biggest issue I see is when a couple is not on the same page, whether that’s about finances or the wedding in general, and they aren’t communicating about it. If you have one partner who is an ultra-long-term planner and thinking about how to retire comfortably at 65, and the other isn’t looking past the immediate future of desperately wanting a 20-piece band and roses on every table, we are going to hit a speed bump.
How would you help a couple get over that bump?
I would guide them toward sitting down and discussing their collective financial health, what they realistically can afford, finding out what they would be willing to possibly finance and making sure they understand what financing would mean down the road.
What is the rule on the max amount of debt a couple should put themselves in when planning a wedding?
I’m not sure there is really a rule, and my job is always to avoid that debt. But if you’ve decided you’re willing to go into debt for the wedding, do it in the most efficient way possible. The absolute last option should be doing it on a credit card with a high interest rate. Discuss with your partner what you feel is a reasonable period to have the wedding paid off and then make plans to achieve that goal. This is where a financial planner can really be an asset, because we can sit a couple down and explain that at a rate of X it will take this long to pay off the wedding.
What are the alternatives to credit card financing when it comes to weddings?
It would depend on the couple’s financial health, but we could discuss home equity lines, security-based lending, and, of course, if it is an option, this might be the last opportunity to dip into the bank account of dear old mom and dad.
You sound a lot like a marriage counselor. How do you work with a couple who are on opposite ends of the spectrum regarding spending and saving?
We would need to decide what are the must-haves that they each aren’t willing to compromise on and what areas are flexible so each party can give and take. I’d want them to each explain to the other why their absolutes are so important to them. There are two factors when making any decision: emotion and intellect. When it comes to weddings, emotions run high, and my job is to be as much of the intellect as possible.