Daughter Receives $20K From Parents To Pay For Her Wedding, Uses It For A House Down Payment Instead

Mike and his wife were keen to support their daughter's wedding plans. To avoid the usual disputes over marriage preparations, they found a simple solution—giving their daughter $20,000 so she could organise the wedding as she pleased.

Mike had estimated in 2015 that wedding costs in the Kansas City, Missouri area would be between $15,000 and $25,000, so the couple decided to contribute $20,000 to the wedding. He and his wife understood that costs often exceed the budget, so they opted to give her a lump sum instead of overseeing each expense with their daughter. This approach allowed the engaged couple to handle all the planning and alleviated the pressure on the parents.

"I didn't want to be telling my daughter what she could and couldn't do," Mike told Business Insider. "She was an adult."

Mike said the decision helped them avoid arguments over who was paying for what and eliminated the need for repeated budgeting whenever an extra cost arose. He, his wife, and the newlywed couple were all happy with the lump-sum agreement.

According to a 2023 study by The Knot, which surveyed 10,000 couples in the US, the national average cost of a wedding was $35,000, while the average in Kansas was $25,000. However, 56% of couples exceeded their planned budget by an average of $7,900.

A Surprising Turn of Events

Mike's daughter had different plans. She used the $20,000 for a down payment on their home and then paid for the wedding out of their own pockets. This shift reflects a broader trend in the US, where more couples and their families choose to split wedding costs equally. Additionally, Americans are getting married later in life, allowing them to be in a position to take on more responsibilities like wedding expenses.

"Then they kind of tricked me," Mike said. "One day, they came home and said, 'Hey, we bought a house.'" Although surprised, Mike understood it was positive that his daughter and her fiancé paid for their wedding.

"If kids are not given carte blanche on wedding plans, if they're forced to budget from their standpoint, the whole thing just doesn't get out of hand," he said.

The wedding took place at the rose garden in Loose Park in Kansas City. Mike said everything about the wedding appeared reasonable, but he had never asked what the couple had spent the money on. "I never asked," he said.

Mike admitted it might have bothered him if the couple had used the money for a down payment and then eloped, but as long as he and his wife could attend their daughter's wedding, they were happy.

"I figured I got off for a reasonable amount of money for the wedding, and they got a down payment on a house out of the deal and a wedding," he said, adding that many people watch lavish weddings on TikTok and miss the "whole point of having a wedding, which is to have a marriage."

His wife later gave their daughter a bit more money, which he thought was something related to her dress. "She snuck it in," he said, laughing. "She couldn't resist."

How Bigger Down Payments for Homes Help

Mike's daughter's decision to make a down payment on a house could be an intelligent move, as housing prices reached record levels in April amid a housing shortage and a worsening affordability crisis due to high mortgage rates.

A larger down payment on a home can make it easier to secure a loan and usually translates to smaller monthly payments. Lenders might also offer better deals on interest rates to creditworthy borrowers. When you make a significant down payment, you borrow less and will owe less in total interest payments, which is advantageous in the long run.

For instance, if you buy a $200,000 house with no down payment and take out a 30-year, fixed-rate mortgage at 4%, you would pay more than $143,000 in interest over the loan's tenure. However, if you made a $40,000 down payment on the same house and took out a $160,000 mortgage with the same terms, the total interest payments would drop significantly to $114,989, saving you over $28,000.

A lump sum down payment on a property can also help you outbid potential buyers for a property you want. Many sellers prefer buyers who are most likely to close the deal since failure to obtain loan financing is a common reason for deals falling through.

Millennials and Gen Z Are Starting Early on Serious Financial Planning

A recent survey of 2,200 US adults by Corebridge Financial found that almost 75% of Gen Z individuals participate in serious financial planning before age 25 compared to older generations. Nearly 50% of baby boomers said they focused on financial planning after 35, while 69% of millennials began financial planning before age 35.

Furthermore, a 2024 Millennials' Financial Milestones study from the CFP Board revealed that achieving financial independence is the highest priority for US millennials, followed by travelling, a healthy retirement, and career fulfilment.

Meanwhile, 70% of the surveyed millennials are optimistic about achieving their life goals. They prioritise financial security by creating emergency funds, carrying low debt, buying a home, and contributing to retirement funds. Younger generations are finding new ways to earn extra money, reduce discretionary spending, and develop budgets that work for them.