How Much Should You Spend On An Engagement Ring?February 5th, 2013 | Posted by in Saving Money
So you’re confident that you’ve found the one that you’ll spend the rest of your life with. Congratulations! Now you have to pony up some cash to buy the ring. While there are a couple of [old school] rules-of-thumb about how many months’ salary you should drop on the purchase, I’m here to tell you to throw that out the window. In this post, I’ll quickly break down the 4 C’s of diamond selection, what really matters, and how to determine what you should spend.
Photo from MadameNoire . com
Before you start shopping around, it’s a good idea to get a rough idea on what she likes. Is she into sparkly things? Is rock size more important to her? There is no extra-smooth way to ask her these questions, so just get the information well enough in advance of the proposal, such that she won’t expect it when you get down on that knee!
The (in)famous 4 C’s
Before coming up with a budget for the ring, you have to determine what factors are MOST important to your future fiancé. If she wants a huge, clear, flawless, sparkly, ring, you’ll end up spending a small fortune, which is silly. If she’s really into color, than maybe you can get a smaller ring, if she’s into size, maybe she’s ok with something that isn’t perfectly flawless.
Below I’ve outlined the 4 C’s (cut, color, clarity, carat) that influence how a diamond is priced.
Diamonds are rocks that are pulled out of the ground (typically by oppressed people) and cut by jewelers into different shapes. Remember that unless you’re buying an emerald-cut stone, it will be very difficult to see imperfections. Below are the most common options.
Picture from A-1 Diamond
The closer the diamond is to being completely colorless, the more expensive it will be. The scale goes from D all the way to Z color. That being said, unless you’re a professional jeweler or gemologist with perfect eyesight, NO ONE will be able to tell the difference between D, E, or F (and in many cased G or H), so why spend more?
Keep in mind that the lights in the jewelry store will be very bright and white. Under everyday circumstances lights won’t be that perfect, it’s virtually impossible to look at someone’s ring and differentiate between colorless and upper bands of near colorless.
You hear rappers talk a lot about VVS this and VVS that all the time. Below is the diamond clarity chart. My rule of thumb is “If I can’t see anything when I stare really hard at the diamond, then no one else will see anything.”
Picture from AM Jewelers
Carat is simply the measure of the weight of a diamond. This often relates to how big it will be.
Keep in mind that price doesn’t move up linearly with the carat. This means a 2 carat diamond won’t be twice as much as a 1 carat diamond. The 2 carat diamond will usually be more than twice as much, since larger diamonds are more rare. Below is a little chart.
Chart from Diamonds4sale
The setting is just the metal part of the ring. This can be made of anything from silver, to gold, to platinum. Fortunately this isn’t a major expense (relative to the diamond).
Make a spreadsheet
Once you’ve figured out what factors are important to her and what you think she’s willing to compromise on, make a spreadsheet and begin calling around to different stores. So that your comparisons are standardized, make sure you ask each store what a 1 carat, princess cut, F color, VVS1 (for example) diamond will cost.
So…How much should I spend?
First and foremost, buying a diamond engagement ring should NEVER EVER be something that you go into debt to do. Look no further than my post on Dating Someone with Debt, to see the impact debt can have on a relationship. Two months’ or three months’ salary is absolutely ridiculous. How much you spend isn’t proportional to your love for the other person. You should be able to comfortably pay for the ring all at once, and still have money leftover in case you lose your job or have an expensive emergency. This may require you to start saving as much as a year in advance! If you feel like you have to really stretch your savings account to pull off the purchase, you’re probably spending too much.
I think a good starting point is one month’s take home pay. That means after your 401k contribution, taxes, etc. Remember that this is just a starting point. Feel free to move up and down as you see fit, but one month’s net pay seems reasonable….and again… DON’T TAKE ON DEBT FOR A RING EVER.
Why you shouldn’t listen to your “friends”
Many people who drop a ton of money on a ring will encourage you to do the same. They do this so they don’t feel as silly about their decision. People who make unwise choices often want company. I’ve also found that a lot of people lie or exaggerate about how much they’ve spent.
I’m broke but still want to get her something nice
Consider a stone other than a diamond. In my humble opinion, emeralds, amethysts and other colored stones actually look a lot cooler. You could also get something small and upgrade in a few years. From my experience, the excitement she’ll feel from the proposal will infuse itself into whatever ring you pick. In short, no matter what, she’ll love it because you took time to pick it out.
If not, maybe she’s shallow and you should think twice about her as a future life partner.
The good news
No matter what you get, all of her friends will tell her how nice and pretty it is anyways! Remember that the people who mind don’t matter and the people who matter don’t mind.
What do you all think?
[Full disclosure, I recently proposed to my beautiful girlfriend and she said yes.]
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