How Much Should You Spend on an Engagement Ring?

FT Contributor  | 

If you ask your parents or grandparents, “How much do I spend on an engagement ring?” you’ll more than likely get a lecture that includes an explanation of the outdated “two to three months’ salary” rule. This rule is antiquated because it doesn’t take any personal factors into consideration. It only allows you to consider your gross monthly income and determine your budget from this one figure.

When you’re trying to figure out how much money to spend on an engagement ring, you should consider your life and the shared life you plan on living with your partner, analyzing your financial goals, personal tastes, and monthly expenses. Learning more about the jewelry industry and how to choose a ring can also help you to set a realistic budget that both you and your partner can be happy with.

How to Budget for Your Engagement Ring

There are many factors to consider when calculating how much you should spend on an engagement ring. Not only is your current income important, but you should also analyze your expectations for your financial future as well as you and your partner’s relationship and plans as a couple. Before you decide on your engagement ring budget, take the time to think about:

Your current financial situation:

Analyze your current monthly income and expenses and determine how much wiggle-room you have in your budget for a down payment for a ring, or to begin saving up for the whole cost of a ring. Be realistic and also consider any financial changes that may be coming up, such as fewer hours at work or another child on the way. It’s also important to think about the cost of the wedding and additional bills you may have when you blend two households together, including your partner’s debt or childcare costs.

Your partner’s expectations:

The engagement ring cost you’re willing to pay should also be directly related to what your partner wants. It’s important to get an idea of expectations for the ring so you know exactly what options you have and the corresponding budget you’ll need to stay in. If you want your proposal to be a surprise, you may have to do some investigating and guessing. Try to get your partner to provide you with a few favorite ring designs so that you know you’re on the right track. If you can’t get any hints, analyze your partner’s hobbies, interests, style, and current favorite pieces of jewelry to get an idea of engagement ring expectations.

Sentimental values:

If you figure out exactly how much to spend on an engagement ring, you may feel you need to spend at the top of your budget. It’s important to keep an open mind to less expensive options, especially if you think your partner would appreciate these designs better than rings with higher price tags. If you know your partner wants a dainty vintage ring with an emerald stone, the engagement ring’s price may be well below your budget. It’s better to provide your partner with the ring that’s desired than to spend as much money as you’ve budgeted for. This will attach sentimental value to the ring and will show you appreciate your partner’s tastes.

The 2-3 Month Salary Rule

It can be tempting to simply follow the outdated two to three months’ salary rule when figuring out how expensive an engagement ring should be. This expired rule only uses one calculation and doesn’t require you to analyze your budget, financial situation, future financial goals, and partner’s expectations. However, if you decide to use this old rule, you could end up spending a fortune on an engagement ring, which can send you into debt and set you up for a bad financial future with your partner.

According to BBC News, the unrealistic two to three months’ salary rule for an engagement ring budget may have been created by the De Beers diamond company. This rule was started in the 1930s and may have originated as a marketing ploy for the diamond company to make more sales with higher price-points. When this rule originated, debt wasn’t as common as it is today. In those days, consumers would save up their two to three months’ salary and buy the ring, without regard for debt or other financial plans.

Today, this ridiculous rule could make you go broke trying to pay for an engagement ring. If you use this calculation, the more you make, the more you’ll have to spend, regardless of what you have planned for you and your partner’s financial future. For example, according to this rule, if you make $150,000 annually, your engagement ring should cost about $37,500. This is an exorbitant price tag, especially if you have ambitious financial goals and your partner isn’t expecting an extravagantly designed ring.

Engagement Ring Costs Explained

To figure out how much you should spend on an engagement ring, you’ll need to consider how the ring’s cost is determined and what’s important to your partner. There are several characteristics that can directly affect a ring’s price, including:

  • Quality.
  • Carat size.
  • Cut.
  • Clarity.
  • Color.

For example, a high-quality ring from a well-known designer with a big diamond will be more expensive than a simple ring that has a smaller diamond. The clarity of the diamond can also make the price higher and the cut of the diamond you select will correlate to the price of the ring.

If you know your partner wants an engagement ring that’s unique, you can look into non-traditional rings, such as vintage designs or those with stones other than diamonds, such as emeralds or pearls. By choosing an alternative ring, you can customize it to the unique interests of your partner without blowing your budget.

How to Get a Good Quality Ring for Less Money

If you’re worried about how much to spend on an engagement ring, it’s important to take the time to shop around for the best deal. The ring you choose should make your partner happy and still allow you to feel confident in your financial future together. You can find a high-quality ring for less by:

  • Opting for an intricate setting that makes a small diamond look bigger.
  • Shopping at stores that are currently running specials or sales.
  • Checking out estate sales for vintage rings.
  • Customizing the ring with non-traditional gems or settings.

Proposal season is usually between Thanksgiving and Valentine’s Day. Avoid shopping for an engagement ring during this peak time to find the best deals.


Image Source: https://depositphotos.com/

This post was updated November 7, 2019. It was originally published November 7, 2019.