The modern practice of long engagements could be a blessing, because it gives couples enough time to save for their wedding. With the rise in popularity of destination weddings and other extravagant options, costs have been rising steeply since the early 2000s.
Weddings cost around $15,000 for a catered, but otherwise simple event, to $50,000 and more for couples determined to arrive in a stretch limo, and whose families have pressured them into inviting a bunch of people they have never met. Keep in mind that we haven’t even factored in the cost of the honeymoon.
With parents increasingly demurring from such prices, couples set on making the day as elaborate as possible are choosing to stand the cost themselves.
Millenials are a practical generation. As divorce statistics remain high, younger couples are now devoting more time to getting to know each other before making the commitment to marriage. This is good news because, with longer engagements, it gives couples more time to save up for the wedding using a tax-free savings account (TFSA).
At present, the maximum you can contribute to a TFSA is $5,500 per annum, and it’s a solid way to save while you don’t pay any taxes on investment returns or interest income.
If the bride and groom can put the annual maximum in a TFSA, within three years the couple will have enough to pay for the ceremony, venue, catering, and DJ, plus the honeymoon. They will even have enough left over to purchase a couple of household appliances. And these are just part of the benefits of TFSAs.
TFSAs are a far better choice for a short-term savings effort than any other tax-sheltered vehicle. They outshine regular savings accounts and other non-registered investment funds, because gains or interest from those vehicles are taxed when you redeem them and when you withdraw funds.
Once your TFSA holds only liquid investments, withdrawing from it is as easy as taking funds out of a conventional bank account.
Many people have misconceptions about TFSAs. When they were introduced in 2009, financial planners had the tendency to present them to their clients exclusively as investment vehicles, even though they were created to increase savings options for all Canadians. Consumers also perceived TFSAs as vehicles for individuals with higher net worth.
Really, TFSAs are for everybody, and are a straightforward way to pay for that big day. So considering the advantages of TFSAs, you should definitely get one.
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