S.O.S. – Saving Our Simcha

Whoever coined the phrase “the best things in life are free” must never have married off a child.  What should be the happiest time of a family’s life can instead be a blur of empty accounts and gemachim. In addition to the actual wedding, you have the choson gifts, sheitlech, new wardrobes, and apartment furnishing.  The vort and Shabbos sheva brachos are also financially draining events.

Simchas are a big financial hurdle for frum families and many who regularly make ends meet find themselves underwater when a simcha happens. Depending on family sizes and community circles, tens of thousands of dollars are dished out towards wedding expenses. Especially when there are support commitments for the new couple, racking up debt to pay for the chasuna is something to be avoided if at all possible. The good news is that Simchas do not occur in stealth. Bar Mitzvahs include a  13-year early warning and weddings, while not precisely predictable, have even longer lead times. You can use those years to save up for future commitments.

A Penny Saved…

In yeshiva, bochurim are reminded that shas can be learned in 5 minutes; that is 5-minute slices accumulated thousands of times. So too, most wealth is gathered bits at a time. In his excellent book, “The Millionaire Next Door,” Professor Thomas Stanley explains that despite popular belief, most millionaires do not inherit their wealth or earn huge salaries. Instead, the majority of wealthy people accumulate their money over time by living beneath their means and investing the savings.  (Becoming  super-wealthy, defined as a deca-millionaire, usually requires ownership of a successful business and/or significant real estate.) While not aspiring to millionaire-dom, you can pay for your simchas through slow and steady accumulation.

It is never easy to scratch together money, so the best way to save is on an auto-pilot schedule. It is obtainable to reach a goal of $24,000 per simcha account with 240 monthly deposits of $100 (20 years.) Savings accounts can be set up for each child with the fixed amount collected automatically from their bank account.  Although the auto-deposit can be turned off during tight times, small sums siphoned off steadily often won’t be missed. By adding boosters such as the occasional bonus, gift or tax refund to the accounts, you can lower the required amount of monthly deposits.  So too, investment growth can help you hit your goal with less of an out-of-pocket outlay.

Investing Simcha Savings

Chasuna savings account with long-term horizons (i.e. is for a young child) can be invested in stock mutual funds for growth opportunities. By earning a 5% return over a twenty-year horizon, you can can hit a $24,000  per child goal with just $58 monthly instead of $100. Investment companies like Vanguard, Schwab, or Fidelity can automatically invest the deposited sums you into well-diversified, low-fee funds with excellent potential.  As children grow and the time horizon shortens, it is time to lower the account risk by allocating more of the nest egg to quality bond funds.  If you aren’t the ‘do-it-yourself’ type, you can have a financial advisor set up this system.

Another thing to consider when investing chasuna savings is ensuring that you don’t get hit with a big tax bill when cashing out the profits. Luckily, accounts held in children’s names can easily avoid this. Current tax rules allow a child to accrue up to $2,000 in annual income tax-free. That amount of gain can be strategically locked in every year by selling the shares annually at a profit and immediately repurchasing them. This savvy “tax gain harvesting” strategy is particularly beneficial to someone consistently locking up money for several children.   As with all tax matters though, you need to run it by your accountant beforehand.

Avoiding the Last Resort

A chasuna is a big deal, and it is perfectly normal for it to be prohibitive financially. This is why the mitzvah of hachnasas kallah has been around for thousands of years. Klal yisroel always steps up, and there are many gemachim and organizations to help people pay for this great event and mitzvah. That being said, it is obvious that people should do all they can to pay their own way and not to have to come on to the generosity of the tzibbur. Planning and saving carefully can go a long way toward that end.

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