Should you pay for a graduation party with a personal loan?

Graduation parties are popular in the US. Whether parents are celebrating their child’s achievements, or just the fact that he or she will be moving out, they are shelling out big bucks for bashes. Often this means parents are asking themselves how to pay for a graduation party.

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While some don’t see the need for an over-the-top event, others wouldn’t miss it. After all, big-ticket celebrations to mark milestones in a child’s life are part of many cultures — from the Bar Mitzvah and Bat Mitvah in the Jewish community to the quinceañera or quinceañero in Latin-American culture.

If parents want to throw and pay for graduation parties, why shouldn’t they? What’s wrong with a little parental pride in the solid, objective achievements of their offspring? The only fly in the ointment is that “pay for” bit.

how to pay for a graduation party

Budget for graduation party

Often, these celebrations don’t come cheap. When GraduationParty.com commissioned a nationwide survey, it found the average cost of a graduation party was $985. And it suggests a country-club option that comes in at a cool $6,483.

Naturally, there are plenty of ways to save on a graduation party. Do a web search and find loads of craft and cooking ideas to make your child’s both special and affordable. Publications such as Good Housekeeping and HGTV have some excellent ideas: from edible class rings and DIY garlands made up of colorful mortar-board tassels to backyard tailgate parties. But perhaps the best idea is to team up with the parents of some of your kid’s fellow graduates to share the work, costs and general pain.

Don’t despair if that’s not an option. Providing you have some basic craft and bakery skills — and the time — you can bring in the sort of unique and memorable celebration money can’t buy.

Related: What Is a Personal Loan, Signature Loan or Unsecured Loan?

How to pay for a graduation party

But suppose you lack those skills — or, more likely, the time to employ them. If you have to buy food, party decorations, invitations, beverages, banners and everything else, you’re bound to spend a fair amount. The smallest sample budget GraduationParty.com came up with was $525.

And that can be a lot of money, especially if you’ve spent years either getting your child through college or saving up to do so. And it’s not as if the party is the only cost of graduation. Many parents find themselves paying for other essential or optional costs, including:

  • Renting or buying a cap and gown
  • Graduation announcements
  • Graduation fees (not all schools)
  • Purchasing a class ring, a high school yearbook and maybe a senior portrait

This stuff adds up,and not everyone has that sort of cash on hand.

Borrowing to pay for a graduation party

So what do you do if throwing a party for the graduate in your life is important to you, but you can’t fund it from your savings? Unless your family is willing to chip in, you’ll probably have to borrow.

But you can keep the costs manageable by concentrating on what’s important to you and cutting costs on non-essentials. For instance, it’s a lot easier to go all out with food if you keep your guest list manageable. And a deejay is cheaper (usually) than a band. Or the kids may even prefer being their own deejays.

Related: Personal Loans Beat Credit Cards for Large Purchases

Credit card for graduation celebrations: unwise

Credit cards are not usually the best way to borrow. Even mainstream cards can have extortionate interest rates. And there’s a little-known threat to your credit score: Let your balance stray above 30% of your credit limit, and your FICO score takes a hit.

But nobody’s going to blame you for putting a few hundred dollars on your plastic. If you’re savvy, you’ll pay that down within two or three months so that those sky-high interest rates don’t hit you hard.

Personal loans for significant graduation party expenses

If you need to borrow more than a few hundred dollars, a personal loan is likely to be a better choice than a credit card. If your budget’s close to the average cost of a graduation party (nearly $1,000) or higher, then it’s likely to be a much better choice.

That’s partly because you’re almost certain to pay a much lower interest rate. (Average personal loan interest rates run about 7% lower than average credit card rates.) But it’s also because of some other inherent advantages that personal loans bring.

To start with, you choose your repayment period, based on how easily you can afford the monthly payments. Second, budgeting is a piece of (perhaps graduation party) cake: your payments are the same each month. And third, you know from day one when you’re going to finish paying the debt. The term is fixed and you can’t be tempted to stretch things out.

All that makes personal loans much better (less costly, more responsible and more predictable) than a standard credit card. Of course, you can still earn rewards by buying everything you need for the graduation party on your plastic. Just zero your balance using the funds provided by your personal loan.

It takes very little time to apply for a personal loan, and you receive your money very quickly. The easiest way to start is to click the link below.

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