4 Smart Things to Do With Your Wedding Gift Money
If your generous wedding guests gifted you with money to help you start married life, you may want to consider putting that money to good use. From paying off debt to saving for a house, here are four smart things to do with your wedding gift money.
1. Start an Emergency Fund
When you’re still in the honeymoon phase of your marriage, planning for the unexpected may not be the first thing on your mind. Saving that wedding gift money for a rainy day can be a smart decision, though, says Brides.com. Starting an emergency fund may help you be prepared if the car breaks down or one of you has unexpected doctor’s bills. Eventually, you’ll want to have three to six months’ worth of expenses in your fund, according to The Balance, and your wedding gift money can help give you a solid start.
2. Pay Some Bills
Another practical use for your gift money is to put it toward some of your bills, from monthly expenses to paying down debt. If you have credit card debt or a car or student loan, consider putting money toward the highest-interest debt, says Brides.com. The benefits of paying off your debt range from having more money available to save to feeling less anxiety about your finances, says MONEY.
Whether you use the money to pay for some regular bills or put it toward your student loans, spending the gift money on expenses may help give you a little more financial freedom.
3. Save for the Future
When you’ve just said, “I do,” retirement may not be on the top of your mind. However, the sooner you start contributing to your retirement funds, the more time the money has to potentially grow and earn interest for you. If you contribute to your 401(k), you may even qualify for a matching contribution from your employer. You can also talk to a financial professional about opening an Individual Retirement Account.
As Brides.com notes, putting money away now may make planning your retirement much easier. Whether you want to travel, spend time on the golf course or buy the retirement home of your dreams, putting some of the wedding money toward your goals may help make it a reality.
4. Invest in Your Home
If you’ve been dreaming of buying your first home together, your wedding gift money may help with a down payment. It’s a good idea to have 10 to 20 percent of a home’s purchase price as a down payment, says DaveRamsey.com. You may want to invest the money in a certificate of deposit or money market account, says The Balance, to help you reach the amount you need for the down payment.
If you already own a home or aren’t looking to buy one, you may want to use the money on improving your current place. The Knot suggests using the money on some much-needed furniture, like replacing that worn-out couch or finally upgrading your bedroom set.
While wedding gift money can feel like a sudden windfall, putting it to good use now may make a big impact on your finances down the road. Consider saving or spending it in a way that will help your marriage get off to a good financial start.
Originally published on August 13, 2013.
The statements above are for educational purposes only and not intended as specific tax advice. Allstate cannot provide tax or legal advice. Consult a tax advisor regarding your particular circumstances.