Hello everybody, it's Sam from Financial Samurai and I'm doing this podcast from Sonoma Valley. I'm here at a friend's place and finally, finally taking our first family vacation. And I gotta admit, it's so far so good. Our son is about 18 months old now and we waited this long because, well, we were just kind of wussies as parents, frankly.

We were just, you know, wanted to just stay home, didn't want to deal with the hassle, the packing. We definitely didn't want to get on a flight. So we said, well, let's do a staycation for as long as possible until he starts sleeping well. And so now he's sleeping a little bit better now.

He can sleep like 8 to 10 hours through the night, most of the time. And we thought if we can drive up to Sonoma or Napa, it's only about an hour to hour 15, hour 30 minutes away. We could drive during his nap time and all will be good and so far so good.

So the next trip will be Tahoe and then, maybe after 2 years old, we'll take a flight to Hawaii. So in this podcast, I want to talk about a fun topic which is wedding spending rules to follow if you don't want to end up broke and alone. So I'm going to my friend's wedding in November and I know it's going to be an amazing wedding.

So it just got me thinking about how much the average American should spend on a wedding. Did you know that the average cost in America for a wedding is around $33,000 according to the Knotts 2017 wedding survey? If you live in Manhattan, the average spend is closer to $77,000.

In comparison, San Francisco weddings are only about $39,329. So I'm telling you folks, San Francisco is not as expensive as folks make it out to be compared to Manhattan. Manhattan is way more expensive than San Francisco. So with the median household income in America at around $60,000 according to the US Census Bureau, what is going on with couples who are willing to spend roughly 70% of their annual after-tax income on such ephemeral pleasure?

So I went ahead and asked some readers and asked some random folks who have spent $33,000 or more on their weddings to hear what they had to say. Here were some of their responses. One woman said, "I wanted a night we'd never forget." Well don't we all. Another guy said, "The wedding is more for our family than it is for us.

We both have huge extended families that must all be invited." Another woman said, "Everything from the venue to the flowers costs so much nowadays. It's hard to spend less." A guy said, "I already spent $18,000 on a ring. What's another $50,000 spread among 200 people?" That's a good point.

And finally, here's my favorite response from a guy. "I didn't want to spend $300,000 on a wedding. My wife did. I hate weddings and would rather have just gone to City Hall for a couple hundred bucks. It's all curated and fake for thirsty Instagram users." Well said. So given I came up with the engagement buying rules, thousands of lovebirds have followed since 2010.

If you Google "engagement buying ring rules" you'll see Financial Samurai's article up top. It's only appropriate I come up with wedding spending rules for financial freedom. Controlling wedding costs is arguably much more important than overspending on an engagement ring because at least with the engagement ring it can be reused or resold.

You won't get the price you paid but you'll get something. Whereas a wedding you don't get anything. I'm certain that if you follow my wedding spending rules your marriage will last longer and you'll have more wealth than if you spend what the average American spends on a wedding. And if for some reason your marriage ends before the average duration of 8 years or you end up having a lower household net worth for your age than the average, then you can simply blame each other for all your mistakes.

So here are 5 wedding spending rules to follow. 1. Spend no more than 1% of your newly combined household income. So if he makes $60,000 and she makes $80,000 then they should spend no more than $1,400 on a wedding. If their newly combined household income is $1,000,000 then they can ball out on a $10,000 wedding.

Only when the couple starts earning $3,000,000 or more should they come close to spending what the average American spends on a wedding. You can see from the chart in the post the real median household income in America is around $60,000. We've just now surpassed our 1999 highs. That's almost 20 years of no income growth.

Therefore if the typical American follows my 1% rule, they should limit their wedding cost to roughly $600. Casual weddings in your backyard are not only intimate, but cost effective. 2. Spend no more than 1% of the value of your combined pre-tax retirement plans. So everything starts with I think savings and contributing to your 401k and IRA and so forth.

It's the easiest thing everybody can do to save for retirement. So let's say at age 30 she has a financial samurai recommended $150,000 in her 401k and at 35 he has a financial samurai recommended $300,000 in his 401k. This couple can spend up to $4,500 on a wedding. By drawing the couple's attention to their retirement savings plans, there will be a natural tendency to spend less given spending more means a later retirement.

The more you hate your job, the less you will end up spending on a wedding as a result. The third rule, spend no more than 50% of your combined side hustle gross income. Let's say the couple has a combined W-2 gross income of $120,000, so that's day job income, but also makes $20,000 selling t-shirts and trinkets online.

The couple can now spend up to $10,000 on their wedding, but I bet they won't because everybody who side hustles knows how exhausting it can be to make extra money outside of their day job. And why are people side hustling? They're side hustling because they want to retire early and live a life of freedom, but they do have the green light.

They do have the green light to spend $10,000 because they can. They're so far ahead of everyone else who just relies on only one source of income to survive. I think that's one of the biggest mistakes Americans, human beings have who really want to achieve financial freedom. Just relying on your job is a no-no.

Four, spend no more than 10% of your annual passive income. Side hustle income requires work, so the next step is to build passive income because it requires little to no work at all once the investments are made. And that's why I encourage everyone to build their after-tax investments beyond their pre-tax retirement accounts.

If the couple happens to save and invest aggressively for 10 years to generate $30,000 in annual passive income, they're free to spend $3,000 on a wedding. My guess is they won't, or maybe they will, because they didn't start generating passive income for a wedding. They started generating passive income to one day be free, so it really is a little bit painful.

But $3,000 is not that much for a wedding. It's pretty reasonable depending on your wedding-size party. And as a gut check, I'd be willing to spend up to $20,000 a year on a wedding based on my current passive income of about $200,000 that took 19 years to build. I'm 41 now, she's 38 now.

Could we spend $20,000 for our friends and family? I think we could, but man, I think I'd rather just spend like $5,000 on a great dinner party, do some speeches, some drinks, I don't know, maybe like 50 of our closest friends and family, and then just save and invest the remaining $15,000 or donate it to people who actually need the money.

Alright, so five. Spend no more than $1,000 per year you've known each other. Or you can do $1,000 per year for as long as you've been dating. So if you guys started dating in college at 21 and decided to get married 7 years later, well, maybe you guys can spend up to $7,000 on a wedding.

It's a pretty easy rule. Let's say you guys started off as workplace friends at age 25 and then you married other people, you got divorced and decided 20 years later you were always meant to be together, then spending up to let's say $20,000 is more digestible. When you've already gone through the ringer once, you presumably, you should have a better idea of what you want with your superior earnings power in your early to mid 40s.

And by then you probably won't want to spend $20,000 because you have less people to impress. Or, I guess maybe you will spend happily $20,000 because you're just YOLOing life and your midlife crisis and you know, you understand your morality and mortality. Every case is different. And finally, I've got this great, great rule.

This is a bonus rule that I think maybe many people, many people take advantage of. Feel free to spend as much as your respective parents want to spend. If a couple is lucky enough to have wealthy parents who love them so much to cover all their costs of their wedding, then they should go right ahead and accept their generosity.

And if it turns out the newlyweds accepted their respective parents' help in spite of the fact their parents are financially struggling, then the married couple will simply have to take care of them financially for the rest of their lives. It's interesting. I've always taken the view that as adult children, we should actively try to give back to our parents, not take from our parents after they spent 18 years taking care of us.

You know, I'm only like 18 months into being a father and man, it is hard work. It's so hard. It's so hard that I'm already thinking about taking a vacation and going back to work. That's how hard it is. Think about it. So many people just want to leave work to, you know, just chill out and maybe be parents.

But I'm telling you folks, being a stay at home dad is a tremendous amount of work. And also, you know, I'm writing and I'm doing this podcast. So there's always something to do. And if my son doesn't insist on being a man and paying for his own wedding when he's, I don't know, 28, 30, 35, whatever the age he gets married is, I'm going to send him this post.

I'm going to send him this podcast and say, hey, buddy, I think it's important to pay your own way because you're an adult now. You're a man now. I'll be there for you. I'll always love you. I'll support you. But when it comes to your own relationship and spending money on a probably six hour to seven hour event, I don't think spending thousands and tens of thousands of dollars on a wedding is a good idea, son.

So you're obviously free to spend more money on your marriage if you want to, especially if you're rich. But spending 33,000 for a wedding is truly a ridiculous amount for the average American household who only earns about 60,000 a year in 2018. You know, I guess a lot of parents pay for the wedding and hopefully they can afford it because if you are a parent in your 60s, 70s, yes, it's going to be a proud moment.

I know I'm going to be so proud if and when my son gets married and finds the love of his life. Maybe I'll just open my wallet and pay for everything, but I'd like to see some skin in the game. I'd like to see some rational thinking because at the end of the day, I am a finance oriented person.

I write a personal finance site and I have a personal finance podcast. If you annualize the cost of the wedding, the cost is $12,045,000. And you're asking, "What am I talking about?" Well, simple. $33,000 is the average cost of the wedding. Times that by 365 days, that's an annualized cost of $12,000,000.

And goodness forbid something bad happens at the wedding. I went to one wedding and this guy on the dance floor spilt red wine on the bride's couture dress. That was an awkward, sad moment. She started crying. Goodness forbid a drunk friend gives a terrible speech in front of everyone.

And goodness forbid thunderstorms wash out the outdoor venue. Everybody's got to go from outside to inside, right? That would be not so good. So if your wedding isn't perfect, then you're really going to be upset. Divorce rates are about 46 to 50% in the United States and Australia. Only Sweden surpasses the United States in terms of divorce rate at 55%.

And then conversely, it's interesting. Only Italy, well not only, Italy, Spain, Singapore, Poland, Greece, they all have divorce rates at 18% or less. So I wonder what's going on there. If you follow at least one of my wedding spending rules, you'll be able to get your marriage off to a great financial start.

Not only can you use the money saved to buy a house, make your future child a 529 millionaire if you want, or bolster up your respective retirement accounts, you'll likely have much less fights, money fights to begin with because you'll have more of it. As I review my wedding spending rules, I gave five.

I gave five to give some kind of variety. But my favorite is number two. Spend no more than 1% of your combined pre-tax retirement accounts on a wedding. Based on this rule, the average responsible American couple should spend between $2,000 to $3,000 on their wedding and that's it. Not $33,000 crazy dollars.

In case you're wondering, we spent about $3,000 on our wedding in 2008 and we have no regrets. That $3,000 included the cost of two round trip tickets to Hawaii, the beach ceremony, and the wedding banquet for 16 people at our favorite all you can eat Korean barbecue place. We decided to invest the $50,000 we were thinking of spending on various investments instead and that money has since grown to about $150,000 and it has grown to generate passive income.

So folks, please, please follow these wedding spending rules if you're thinking about getting married. Get your marriage off to a great start. It's going to be a great time no matter how much you spend because you're going to spend time with your friends and family and that's what matters at the end of the day.