Secure Your Future or Indulge in Luxury?

Maybe you’re one of the more than 2 million couples who tied the knot last year, or you’re eyeing a walk down the aisle in 2025.

Either way, you may have some decisions to make. The Knot, a global content provider for couples planning weddings and other family celebrations, reports that 40% of the guests who attended weddings in 2024 gave cash to the happy couples, while another 10% gave gift cards.

The gift choice begs the question: What should you do with that money?

What to Do With All That Cash

You’ve been through a glorious wedding whirlwind, and there’s no law against extending that pleasure for a little longer. So, go ahead. Indulge in a new sofa or that big screen TV for the home you will share if that’s what you and your partner decide is best.

Once that’s done, though, it’s time to determine the most effective financial course of action for that newfound pile of cash you may be sitting on. The smart money says saving and investing it could be the best way to go, but that’s up to you to decide.

The Honeymoon?

The Knot indicates that 69% of newly married couples head off on a honeymoon after their wedding. Using your wedding money to pay for your trip might not be the best use of those funds, however.  

“Consumption expenses like a honeymoon should be managed from other cash like annual income savings,” says Richard Craft, founder and CEO of Wealth Advisory Group, Inc. “And they should not be overly extravagant,” Craft adds.

Bobbi Rebell, CFP® and personal finance expert at CardRates.com, agrees. “The con of this choice is depleting money that could be contributing to long-term goals as a couple.”

“Discussing and setting aside a honeymoon fund in advance as well as planning early and maximizing credit card points on airfare and hotel costs can ensure couples hold onto cash for future life-planning or other goals.”

An Emergency Fund?

Financial advisors (and common sense) suggest that individuals and families maintain several months’ worth of emergency funds. So this might be an appropriate place to stash at least some of your cash wedding gifts.

An emergency fund is a safety net. It’s money you set aside to help carry you through life’s inevitable cash-draining difficulties, such as a job loss or a serious illness.

You don’t want to begin your life together desperately scrambling to pay unexpected bills. In fact, you don’t want to have to do it in the later years of your marriage, either.

Typically, it’s recommended that your fund be sufficient to cover three to six months of your living expenses (which don’t include discretionary spending on things like eating out or entertainment).

So, for example, if your total, must-pay expenses add up to $4,000 per month, ideally you’d want to have $12,000 to $24,000 set aside (in an interest-earning account) to cover these costs if your income were cut. Additionally, the money could be used to pay for the unexpected, emergency expenses referred to earlier.

A Down Payment on a Home?

Homeownership may be at the top of your newlywed wish list. “If you have a goal to buy a house, decide how far in the future that goal would happen and determine the amount of the down payment that would be required,” Craft suggests.

“Cash from wedding gifts is an ideal way to ‘seed’ that bucket and start the investment return working to grow the money. It’s rare to have a nice lump sum in cash, so the wedding gifts are a great source of capital.”

You can anticipate having to pay for mortgage insurance if you don’t have at least 20% of the purchase price available for a down payment.

These insurance premiums are typically added to your monthly mortgage payment. You probably won’t want to shoulder that additional expense (especially since it doesn’t go toward reducing your mortgage debt).

So if your wedding cash allows for it, make the 20% down payment.

Potential Lender Requirements

Putting your wedding cash toward a down payment goal may come with a few lender requirements, depending on your mortgage.

Fannie Mae and Freddie Mac accept wedding gift money as a down payment, but only for your primary residence. The money must be deposited into your bank account within 90 days of the date of your marriage license, and you’ll need documentation of your receipt of the money as well.

Other Considerations

“In some ways, you make less of a ‘big impact’ on one big goal by spreading the money out over so many goals,” Rebell cautions.

“Couples should think about their true priority. If starting their life completely debt-free is a priority, it would then make sense to first pay off all their debt and then move to the next priority, which might be having that emergency fund.”  

Maybe you added to your debt by borrowing to pay for your wedding. Whittling away at this extra balance might be a good place to start. Otherwise, it could be an impediment to achieving your other cash goals.

You might also want to tuck away some of that money for your retirement years. Investing part of it in a retirement account or even a taxable brokerage account can help ensure your security and happiness together in the future.

The Bottom Line

Many people have more needs for cash than they have the cash. The money that you receive as wedding gifts can provide you with a welcome and significant financial boost.

What you do with this money depends on your shared goals and priorities as a married couple. So weigh your options and decide carefully.

Don’t hesitate to consult with a financial advisor if your personal circumstances raise questions or issues that you can’t address on your own.