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Wedding or new home? How to pay for both

Getting married and buying a home are two big milestones for young adults. If you want both, it's key to come up with a good financial plan.

It's not unusual to see young couples thinking about achieving both goals in short succession. Among those who married in 2016, the average groom was 31 and the average bride, 29, according to The Knot data. Zillow puts the average age of first-time homebuyers at 33 — and recently noted a surge in unmarried couples buying a home together.

But a wedding and a home can easily be competing goals for couples starting a life together. Average wedding costs hit a record high of $35,329 last year. That's roughly equivalent to a 20 percent down-payment on a $175,000 home.

Wedding couple
Khoa vu | Getty Images

Usually, that means couples have to prioritize their saving and spending.

"There are some people that can do both at the same time, but for most, you have to choose one [goal] and delay the other by a year or two," said Pamela Capalad, a certified financial planner and founder of Brunch & Budget in Brooklyn, New York.

Setting a course

Figuring out where you stand — together — should be task No. 1. Most couples have some financial objectives with bigger costs and a more long-term outlook than a wedding, said Kevin Meehan, a certified financial planner and the regional president of Wealth Enhancement Group in Itasca, Illinois. Those might include buying a house, starting a family or travel.

"It's having those conversations about what are our greatest priorities and how does that relate to how we're allocating our money?" he said.

That discussion could influence the timing and budget of your wedding and home purchase.

Start a savings habit you can leverage for both goals. Capalad said she has one client who aggressively trimmed her budget to put away more than $1,000 per month toward her upcoming wedding, an amount she plans to redirect afterward toward the purchase of a home.

Mixing goals

If your parents or other relatives have offered financial help for either a wedding or a home purchase, make sure you have a good sense of the amount being gifted and any conditions attached. Meehan said that when each of his daughters got engaged, he and his wife offered a fixed amount that could be used toward the celebration. If the couple spent less, he said, they could keep the rest for other goals — like a home purchase.

Some engaged couples also ask for home-purchase funds instead of, or in addition to, creating a more traditional registry, said Kristen Maxwell Cooper, executive editor of The Knot. Cash registries for a home or other big-ticket purchases like a car, home renovations or a honeymoon, are becoming more popular as the average ages for brides and grooms creep upward.

"They already have a lot of the stuff you would add to a traditional registry," she said. "Ultimately they want to make sure that if their friends and family want to give them a gift — and of course, they do — that it's something useful."

Watch wedding spending

Nearly half of couples end up spending more than they planned to on their wedding, according to The Knot. That can have consequences for your home purchase if the purchase overlaps with your engagement or occurs shortly after the wedding.

"Your mortgage qualification is going to be largely based on your income, and your credit," said Keith Gumbinger, vice president at mortgage site HSH.com. "The last thing you want to do is disturb your credit in any way."

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Taking on wedding-related debt could damage your credit score — and result in a higher interest rate on that mortgage, he said. High debt obligations or low available cash reserves (or both) can also influence what kind of mortgage you qualify for.

To keep costs in check, create a solid wedding budget. The Knot has an app that helps couples break down how much they can spend on various elements of the celebration, based on their overall budget, said Maxwell Cooper.

One of the quickest ways to save, overall? Trim the guest list, she said. Pick two or three elements of the wedding to focus on, and cut back on those expenses that have lower priority.

"Decide what is most important to you and your fiance," she said. "Try not to do it all."

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