#debate  #society  #tqc  
Issue 43
September 22, 2019
_ __ __ _ _ _ ___ _ _ /_\ _ _ ___ \ \ / /___ __| | __| |(_) _ _ __ _ | _ \ __ _ _ _ | |_ (_) ___ ___ / _ \ | '_|/ -_) \ \/\/ // -_)/ _` |/ _` || || ' \ / _` | | _// _` || '_|| _|| |/ -_)(_-< /_/ \_\|_| \___| \_/\_/ \___|\__,_|\__,_||_||_||_|\__, | |_| \__,_||_| \__||_|\___|/__/ |___/ _ __ __ _ __ __ __ ___ /_\ \ \ / /__ _ ___| |_ ___ ___ / _| | \/ | ___ _ _ ___ _ _|__ \ / _ \ \ \/\/ // _` |(_-<| _|/ -_) / _ \| _| | |\/| |/ _ \| ' \ / -_)| || | /_/ /_/ \_\ \_/\_/ \__,_|/__/ \__|\___| \___/|_| |_| |_|\___/|_||_|\___| \_, |(_) |__/

Last year, approximately 2.5 million weddings took place in the United States. According to the Knot, the average cost of a wedding in America in 2018 (excluding the Honeymoon) was $33,931. That would equate to ~85 billion dollars per year spent on that special (or not so special) day. Irrespective that ~50% of all weddings end in divorce (and 50% of those that don’t probably should) the question remains: Are wedding parties a waste of resources that should be allocated to more appropriate causes?

In March, The Quintessential Centrist discussed the student loan crisis and potential remedies. To forgo lavish spending on nuptials was not a solution we offered. It should have been. While a select few fortunate young couples in America are lucky enough not to be in an “either/or” situation, the overwhelming majority of newlyweds (and their families) should make a conscious choice between spending on a sumptuous wedding, putting the money into a college fund, or making a down payment on a home.

Wedding Ca$hers

While the average wedding costs just south of $34,000, there are considerable variations when broken down by region. At the state level, the least expensive places to get hitched are in Mississippi ($15,581), Alabama ($17,766) & Arkansas ($17,935). The most expensive states to ruin your life in (just kidding) are Hawaii ($39,078), New Jersey ($38,049) & Connecticut ($36,971). The most expensive place to get married is in Manhattan, in New York State, where the average wedding runs close to $100,000 ($96,910).

Real Life

Wisconsin ranks #25, smack in the middle of the pack, with the average cost of a wedding running $24,681. Wisconsin also ranks 23rd in median household income at $54,610. The median home price is $187,100. In the Badger state, the average cost of instate college tuition, room and board workout to ~$18,000 per year.

Let us assume that an imminently married couple in Wisconsin is considering whether or not to divert $24,681 intended to pay for their “average” wedding into a tax-sheltered education IRA for their impending offspring. From 1957 to 2018, the average annual return for a broad basket of stocks has been ~8% (Prior to the mid 1950’s, stocks returned ~10% per year). To be conservative, let’s assume this couple picked a subpar stock fund that returned just 6.5% per annum until their child was ready to attend college. When their child turns 18, that initial $24,681 investment, even returning just 6.5% per year, would be worth $76,675! To be fair, we must factor in annual education costs increases. “The average rate of education inflation at public universities is 2.9%.” Using this methodology, by the time this child is ready to depart for university, the average cost of tuition, room and board at a state school in Wisconsin will be $30,112. $76,675 dollars would cover over 2 years of tuition, room and board. Keep in mind that ~70% of college students are forced to take out loans to pay for their education and leave school with ~$30,000 in debt. Put simply, it would behoove this couple to forgo spending $24,681 on one night (perhaps not) to remember, and put the money towards their unborn child’s education.

Assuming You Want To Live With Your Spouse

The median home value in the United States is $229,000. Like weddings, median home prices vary significantly between states. The Aloha state (Hawaii) takes 1st place as the most expensive place in America to purchase a home ($616,000), followed by California ($548,000) and Massachusetts ($407,700). The least expensive state to purchase a home is Oklahoma, with a median home value of ($123,500). Arkansas ($126,800) & Mississippi ($128,400) rank 48th and 49th respectfully.

Regarding home price affordability, Virginia ranks in the upper middle of the pack. The median price of a home in Virginia is $258,600. The median income is relatively high at $71,535. The average wedding in VA cost just over $30,000, or put another way, ~11% of the total cost of a comfortable dwelling. If a couple decided to forgo a wedding party and re-allocate $30,000 towards the purchase of a home, they would have a down payment in hand.

Let us assume that a soon to be married couple in Virginia is considering whether to use $30,000 intended to pay for their “average” wedding towards a down payment on a house instead. What makes more rational sense, spending ~$30,000 on a few hours of fun (for some people) or allocating those dollars towards the purchase of a new home? To us, the rational choice is obvious. These newlyweds should use the money for a place to start a family.

Even in Manhattan, where the median price of a home is ~$1,000,000, a couple could secure a 10% down payment on a flat if they chose to skip a wedding reception and channel ~$100,000 - the average cost of a wedding in New York City - into the purchase of an apartment.

Half of All Marriages Are Finite

Time and again you hear different iterations of “oh my god I can’t believe we wasted all that money on our wedding.” If a partnership ends in divorce – and ~1/2 of all American marriages do - at least in the case of a home, there would an asset that could be used, sold, or split. In the case of an Educational IRA, at least the additional stress of paying for college while working out finances, logistics, etc. would be partially alleviated.

To spend money on an elaborate wedding party only to get divorced in the future makes that decision even more profoundly suboptimal. Of course, very few people enter into a marriage with the anticipation of getting divorced. But since ½ of all marriages are finite, that is yet another reason - albeit one that most people do not openly discuss - to skip the pricey party and use the money for something logical.

Do Not, Not Celebrate

Let us be clear, we are not saying that newlyweds should refrain from celebrating their special day. Rather, we are arguing that there are materially less expensive, more appropriate and substantive ways to rejoice. Instead of incurring an expense of tens of thousands of dollars on a traditional wedding reception to host over 150 guests (according to Brides.com, the average American wedding has 167 guests), why not spend a small fraction of that and secure a private room at quaint restaurant or cocktail lounge to exchange vows and spend quality time with the people who are truly important to them?

Of course, most quaint venues are not equipped to host 150+ guests; which dovetails into our next point: most wedding celebrations should include only immediate family and close friends. Large weddings tend to be dilutive. As an aside, many wedding guests attend out of obligation, not choice. Ironic indeed because many of these same guests are invited out of obligation. How many iterations of “we had to invite them, we didn’t have a choice, etc.,” have we all heard?

There are some people who genuinely enjoy getting primed and primped for a wedding party. That said, unless those individuals are immediate family or close friends, the overwhelming majority of the other guests find dusting off an old tux (and hopefully fitting into it) or buying a new dress, purchasing a gift, arranging for transportation and conversing with people at a table they don’t know, to be a pain in the ass. And unless somebody dropped dead on the dancefloor or got into a fistfight during the toasts, most likely, nobody aside from the bride & groom, immediate family and close friends will ever think about this overpriced party, more commonly referred to as wedding, ever again.

Can A Couple Even Be “Close” To Hundreds Of People?

While we cannot substantiate our inkling with any conclusive data, we would be comfortable making a sizeable bet that if a bride and groom invite 167 guests (the average in America) to their wedding, they will barely stay in touch (or not stay in touch at all) with at least ½ the attendees. In fact, we would wager that if a couple fast forwarded 20 years, dusted off (or downloaded) their wedding photo album and opened it up, there would be photos of people they cannot even name. These “no names” might be perfectly fine human beings, but are they worth spending hundreds of dollars per plate on, when those resources could instead be used to make a down payment on a home or invest in a child’s education?