Having a wedding at a nice restaurant last time used to be more the norm. But these days, it seems everyone prefers to have one in a hotel ballroom, and preferably at least a 4 star one too. Add in all the other extras and these days, it seems that couples are financially tapped out after their wedding. And if they want a car and a property all in hand before getting married, then a parent’s loan seems to be almost certain.

 

This is spending beyond your means, and even if a parent sponsors it all, it’s not healthy financially. Property can be seen as an investment, (but if you helped your son or daughter buy one, and did not place your name on it, then it is not an investment. It is essentially a huge expensive gift.) however, can a wedding be considered an investment?

 

I cannot use the word investment to define wedding in any sense. How long a marriage will last is not dependent on how big a wedding the couple had, or how much fun it was on that day, whether for them or for the guests. Ultimately, no matter how much money is spent, it’s just one day (or a few days including stuff like engagement parties and ROM parties).

 

If you can afford it, then by all means do so. Some couples marry late, and by the time they marry, they have savings and the means to spend more. It’s the ones which have just started working that really shouldn’t be splurging so much on a wedding. If they get into debt for it, then it will be so much worse. Money is one of the biggest issues which couples often argue over. So starting a marriage with a financial burden caused by spending too much on a wedding is hardly going to make a good case for living happily ever after.

 

On my first list, I included cars. I have griped about them before. I will continue to do so. Cars in Singapore are one of the most expensive things to drive and maintain in the world. The latest news is that the cost of COE for cars above 1600 cc is now over $80,000. That’s $80,000 upfront not for the car, but just for the right to drive it for 10 years.

 

$80,000, placed in even a half decent bond fund which generates 4% annually over 10 years would grow to $118,400. And that’s not even including the cost of the car, or the maintenance, the road tax, and the petrol you will have to spend over that 10 years. I bought my first car just months ago, a 6-year old resale car. I am going to convert it into a weekend car now because I simply don’t use it during the weekdays to go to work. Taking public transport is just much cheaper, especially if you are working in the central business district area. My biggest advice to young couples or singles starting to build their wealth: forgo buying that car. The difference in what you can save over the years you hold back from not buying it can be astounding.

 

I come finally to property. It’s a subject very close to everyone’s hearts. Here, where overall property has risen over the last 4 decades, the idea of investing into property is especially prevalent. However, the first thing to remember here is that the house you live in shouldn’t really be seen as an investment. Not until the time you are ready to downgrade. You can’t eat your house, no matter how big it is, or regardless of the district it is in. Property is only an investment if you can have buy and sell it at will, which means that second property you buy while still having one to live in. With a requirement these days of paying 40% up front in cash in order to buy a second property, it is a huge financial commitment. It is also a huge gamble on interest rates. In the end, property goes through cycles as well, just like stock markets. And yet, it is difficult to diversify when it comes to property. You have to be really loaded to be able to spread your money over several properties. It’s a stretch for most people to even have just one or two. Thus, pouring all your money into property is like putting all your eggs into one basket, and a very illiquid one, because you can’t readily sell half a property to take profit if you need to take some money out. Hence, don’t place everything into just property alone. That increases your overall financial risk. Put into property what you can afford.

 

In the end, one of the biggest goals we aim for when investing is to achieve financial freedom. To be able to reach a stage where we can honestly say that it doesn’t matter whether we are working or not, we will still be able to live the lifestyle we want. Once you reach that stage, you can work for free (do volunteer work), or work for low pay as long as it’s something you enjoy, or just don’t work at all! Having a huge housing debt to finance isn’t exactly conducive toward that aim. Spending a huge amount of money in an expensive car we don’t really need, or an expensive wedding is also not going to help us towards this financial freedom. Spending a large amount of money on anything requires a long and careful think through. And so, when it comes to these three things, which are often some of the most expensive things we do spend on, we need to think them through and work our sums even more. Sometimes, the decisions we make on such big ticket items can have a huge impact to our lives later down the road precisely because they are such large financial commitments. So plan and think through such purchases carefully.