The singer announced the news to People on Wednesday, explaining that the wedding planning process combined with the concern that details of their big day were being released, made them reconsider their plans.
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"We are so busy that we finally just came to terms the other night and were like, 'So, we change our minds and we want to elope'," Kelly said. "We just got so overwhelmed by it – all the decisions.
"We sent out a save-the-date to everyone and then it got crazy and all the details were leaking."
Kelly, 31, also said that her busy schedule, which includes a campaign with an insurance company to teach children about safe driving, also played its part.
"Then honestly the planning – I have a Christmas record coming out. I'm doing a bunch of stuff with State Farm right now. We have two kids who just started school. We're going to all these football games and soccer games and volleyball games and Brandon's got one of the biggest artists (Blake Shelton) in country music. He's flying everywhere."
After making their decision, Kelly and talent manager Brandon — the son of Kelly's manager — sent out an engagement photo and a message to their family and friends.
"Thank you so much for understanding, but it's just going to be me and Brandon and his two kids and the minister," the note read.
The couple have also decided not to throw a big soiree after tying the knot.
"Our whole life is a celebration," Kelly explained. "That's what we keep laughing about. We don't need another day where we throw a big party.
"Our lives are so in the spotlight all the time. Everything is such a spectacle, we were like, 'We would rather have an intimate moment that's special."
But the star said that one of the couple's friends is hosting a get-together in their honour.
"Our friend is throwing us (a party) because we're about to wrap up construction at our house. He's throwing us a huge stock-the-bar party, so all of the people who were going to be at our wedding will be there."
This week Kelly and Brandon released a beautiful official engagement photo, that shows the couple embracing under a beautiful brick archway covered in ivy.
The singer looks stunning in an off-white floor-length gown as she leans into her 35-year-old fiancé.
It is the second engagement photo we have seen of Kelly since accepting Brandon's proposal on 15 December.
On 25 July, she released a solo photo from the shoot. In the Jane Austen-inspired picture, the bride-to-be sits in the window of a library, surrounded by floor-to-ceiling bookcases filled with novels.
She is sat bare-foot and reading a book, dressed in a beautiful strapless tulle gown.
When Kelly does tie the knot, she will not only become a wife, but also a step-mother to Brandon's two children, Savannah and Seth.
Speaking to Ryan Seacrest on Tuesday, Kelly spoke about how much she enjoys the "mum thing".
"I have a 12-year-old and a six-year-old now… after being single for six years!," the star said. "We all live together and everything. It's so different, but it's perfect."
She continued, "They're awesome and I actually totally dig the mum thing… I am quick to go, 'I told you not to touch that!' I am totally my mum! My mum was a hard mum."