What You Need to Know Before Buying an Engagement Ring

Learn About the Average Cost of an Engagement Ring and How to Set a Budget

Couple picking out wedding bands
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Today, deciding to get married can not only be a very happy decision for you and your future spouse, but an expensive one as well. Traditionally, one of the very first expenses is the engagement ring purchase. When deciding to get engaged, you’ll surely have a lot running through your mind, but putting yourself into debt by buying an overpriced engagement ring shouldn’t be one of them.

When considering what to spend on an engagement ring, remember that while advertisers and social media have conditioned couples into believing that the size and price of the diamond is somehow correlated to the level of love and devotion, you know that simply isn’t true.

So here is some reliable and unbiased advice for how to buy a diamond engagement ring smartly and without breaking the bank.

The Diamond as an Investment

Sit down at any jewelry counter and you’ll be sure to hear a sales pitch about the highest quality diamonds being a good investment. While it is true that diamonds are a precious commodity and that they may increase in value over time, remember that finding an investment is not the intention of this purchase. If it were, any financial advisor would advise you to look elsewhere as no one should be buying a diamond engagement ring as a way to diversify their portfolio. Diamond engagement rings shouldn’t be a couple’s emergency relief fund or a place to invest money, so focus your finances on the present and think about the diamond’s price and value today.

Busting Engagement Ring Budget Myths

Before getting into what you should spend on an engagement ring, let's start with debunking some of the most common engagement ring budget myths:

Myth 1: You Should Spend X Month's Salary

You're likely to have heard of the old “two month’s salary” or even "three month's salary" budget standard, but that "standard" doesn't account for your unique financial position or goals and seems rather arbitrary. So where did that rule even come from? While it's been perpetuated and changed over the years, defining the suggested engagement ring budget in terms of monthly salary started with advertisements launched by the diamond conglomerate DeBeers in the 1930s.

Any financially savvy consumer has to realize that the advice of an entity that stands to profit from higher prices shouldn't be considered unbiased information. 

Myth 2: You Should Spend What Everyone Else is Spending

Others use the average cost of an engagement ring as a starting point. Though this may at first appear to be a good place to start the conversation, the average cost has not remained steady over the last few years. In fact, it has only been rising. And while the average cost of a jewelry store diamond engagement ring has been rising to now upwards of $5,800 to $6,000 in 2015, so has the median age of first marriage and as a result, the financial security of the potential purchasers. Though an interesting figure to know, most agree that average engagement ring cost should have no real impact on your personal engagement ring budget. 

How Much You Should Spend

So the best advice we can give is to decide upon your budget based upon your personal financial situation before heading out to the jewelry store, where you put yourself under the pressure of sales people and special offers.

Be realistic about what you can afford or the level of debt you're willing and able to take on and for how long. Remember that you aren’t out to impress the jeweler (who you’ve never even met before) or anyone else with the price of your engagement ring. Stay within your parameters and you’ll keep yourself out of debt.

Consider Shopping for the Ring Together

Relationship statistics show that more than half of people surprise their loved one with a diamond engagement ring during the proposal. This means that the majority of engagement ring purchasers get no input as to what is most important to their future spouse in an engagement ring, which can make determining a budget to stick to all the more difficult. By bringing your future spouse along to look at possible rings, you can get a better picture of the engagement ring he or she will truly wants, which will inform your purchase. Even if shopping for the ring together isn't your ideal situation, simply talking about whether features like size, cut, style, and even cost are important to both of you will provide more direction. If style is more important than size or cut is more important than clarity, you will be able to determine how to best maximize and allocate your budget for the perfect ring. 

How Much Do Diamond Engagement Rings Cost

There are two major factors which contribute to the cost of a diamond: a ratings system called the “Four Cs” and whether or not the diamond is ASG/GIA certified. The Four Cs refers to the diamond’s color, cut, clarity, and carat size. As a general rule, as a diamond increases in size and clarity, and decreases in color, the price of the diamond rises. Diamonds that are ASG/GIA certified are also more expensive.

Most jewelry stores follow some pricing structure similar to the following (though other factors like the brands will always weigh in on the end purchase price as well):

  • Quarter carat or less diamond, $125 to $500 set in 14 carat gold
  • 0.3 to half carat diamond, $750 to $1,000 set in 18 carat gold or platinum, possibly more if ASG/GIA certified
  • For diamonds up to 0.75 carat, or smaller ASG/GIA certified stones, $1,000-$2,000
  • For diamonds up to 1 carat, $2,000 to $3,500, set in 14 carat gold
  • High quality 1 carat diamond, $4,000 or more, set in 18 carat gold or platinum

Before you spend $5,000 on a diamond engagement ring, think about more practical uses for the money like a down payment on a house or for starting a family. A diamond may last forever, but if you aren't in the financial position to afford a big expensive ring you can always start out small and upgrade later if size is important to both of you. Would you rather spend the next five years paying off the credit card bill on that engagement ring purchase or start married life off on a sound financial foundation?

More Tips for Saving Money on an Engagement Ring

Here are some alternatives to buying your ring from an expensive jeweler:

  • Use a family ring for your engagement
  • Buy a ring from an antique shop
  • Stunning high-quality cubic zirconia
  • Pawn shops or classified ads
  • Consider an alternative stone to a diamond
  • Purchase a setting using several smaller stones instead of one large stone

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