As much as possible!
It's 2 months of your salary. Or is it three? Six?
Actually, all those benchmarks were created by the marketing department of a major diamond company (hint: rhymes with “The Beers”). The whole idea behind “diamonds being forever” and why diamond engagement rings were even a thing in the first place, all marketing.
And it's all recent too, like mid-20th century. We're not talking hundreds of years of history, which is to be expected since they probably weren't commercially mining diamonds during the Renaissance. 🙂
(for a full history lesson, this Pricenomics post on diamonds is a must read)
In the end, it has now become custom and it doesn't matter who started it.
So how much should you spend on an engagement ring? How can you save money on buying the engagement ring? And what else should you know? Read on.
How much should I spend on an engagement ring?This is the $64,000 question… and if the diamond industry had their way, the answer would be $64,000.
If you've heard that you should be spending 2 months of your salary on a ring, it's because of the De Beers diamond cartel. De Beers controls a huge percentage of the diamond trade in during the Great Depression, they took a huge hit to business.
To counter this, they tied diamonds to engagements (it wasn't before then) and had a huge advertising push in the 1930s to convince people they should spend a month's salary on this piece of jewelry. By the 1980s, they'd pushed that amount to two months. If you believe the number is three, they tried pushing that too.
(what shouldn't be lost in all this is that the engagement ring's history is a little uglier – it may tie back to a Roman custom where wives wore rings attached to small keys, to indicate ownership by the husband!)
Given the marketing history, what's the real answer to the age-old question of “how much should I spend on an engagement ring?”
The answer is – that depends.
The idea behind the original thought – 2 months – was that if you wanted to show your love and commitment, you wanted to show you also had the means. 2 months salary seemed like a fair amount to someone looking to sell a diamond, but is it fair? The median salary in America based on 2015 Census data is $56,516 – or $4709 a month.
Two months salary is $9,419.
The Knot's 2017 Real Weddings Study, of 13000 couples surveyed online, found the average engagement ring cost $5,764.
That's “just” 1.22 months salary.
If you want a rule, spend about one month of salary and you will find yourself within range of the median.
But does that make sense?
Buy a thoughtful ring together, not just a pricey one
A successful engagement is rarely a shock. The proposal may be a surprise but the engagement is usually seen from a mile away.
If you're expected to pay 1-2 months of salary for a ring, it makes sense to talk about the ring.
Much like those holiday commercials of ridiculous people gifting each other cars with massive bows, you shouldn't be buying an engagement ring in a vacuum. You can talk with your partner about it before to get an idea of what she likes and would want. Some women appreciate and want an expensive ring, others don't.
Diamonds are by far the most expensive type of engagement ring. Diamonds themselves are very expensive.
What are affordable alternatives to diamonds?
There are beautiful stones that don't have the cost, and baggage, that diamonds carry.
The most well-known diamond alternative is cubic zirconia. Scientifically called Zirconium dioxide (it's the cubic crystalline form of ZrO2), it is a synthesized stone that is visually flawless and colorless. It's manufactured so you can actually make it any color whatsoever but it's remarkably cheap. It's incredibly affordable and if you're familiar with diamonds, the biggest visual “complaint” about it cubic zirconia that it's too bright, too flawless, and perfect. If you put one next to a diamond, it looks “fake” because it's too good.
You can buy a 1 ct CZ “diamond” for ~$4.
Another diamond alternative is moissanite, named after the French scientist who discovered it, Henri Moissan. He discovered microscopic particles of moissanite in a meteor crater and identified them as silicon carbide. Natural moissanite is rare but it can be created in a laboratory and while they can be visually different than a diamond, they are prized as an alternative. They are more brilliant, owing to their faceting pattern, and more on the yellow/gray side compared to diamonds.
You can buy a 1 ct moissanite gem for ~$400.
One final alternative is a lab-created diamond, which will be cheaper than one mined from the ground and carry less of the social cost too.
You can buy a 1 ct lab created diamond for ~1,500.
You can buy a 1 ct diamond for anywhere from $2,400 to $18,000.
(these are all ballpark prices, the 3Cs of the diamond can make its value change significantly)
Cubic zirconia and moissanite are the two diamond alternatives that look like diamonds, but plenty of folks go a completely different direction for the gem in an engagement ring. The most popular include going with the birthstones of your future bride, all the birthstones (except perhaps May, which is diamond), or find a completely different stone that captures her personality.
Here are the classic birthstones:
- January – Garnet
- February – Amethyst
- March – Aquamarine
- April – Diamond
- May – Emerald
- June – Pearl
- July – Ruby
- August – Peridot
- September – Sapphire
- October – Tourmaline
- November – Citrine
- December – Tanzanite
What should I know about conflict diamonds?
As is the case with anything of value, diamonds have a checkered past. Conflict diamonds, also known as blood diamonds, are part of that history. It refers to diamonds mined in armed conflict zones. When those diamonds are sold, that money goes to finance more wars and more conflict. It's an ugly cycle that reinforces itself. Many of these diamonds come from Africa.
Once these stories came to mainstream attention, it's easy to understand why a blushing bride would like to avoid one of these diamonds on their finger.
The Kimberley Process Certification Scheme (KPCS) was established in 2000 to prevent conflict diamonds from entering the mainstream rough diamond market. It's debatable how effective it is but it was a good first step.
To avoid conflict diamonds, make sure your jeweler knows where the diamond comes from. If it's Kimberley Process certified or it's outside of Africa, you're usually safe with respect to conflicts. If it's inside Africa, check to see if that area has an active conflict (but even this is imperfect). Diamonds mined in Canada are usually safe and there's a CanadaMark Certification you can look for.
You can never be too sure (unless you go with a diamond alternative) but those steps can help.
How much should I borrow to buy an engagement ring?
If you want to be happy for the rest of your life, the answer is $0.
Don't go into debt for jewelry. Jewelry is never worth as much as you paid for it. Try selling jewelry and you'll be surprised how little you get for it.
Next, I'm not anti-debt. I have a mortgage, I had student loans, and I recognize the value of leverage. Debt should only be used on assets that appreciate. Sometimes you have no choice, such as when you're buying a car that will take you to your job, but with an engagement ring you have a choice. The ring is important but I think you'll agree it's not the same as a car.
We have data that supports the fact that debt kills marriages. If the engagement is about marriage and marriage is about a partnership you will take into your old age, you must avoid unnecessary debt.
In 2009, The Marriage Project by Jeffery Dew, a faculty fellow at the National Marriage Project and an assistant professor of Family, Consumer, and Human Development at Utah State University, conducted research on the role of debt in marriage satisfaction. His research indicates something we can all intuitively guess – consumer debt erodes the quality of married life.
If you want to increase marriage satisfaction, it's not about the size of the ring but the size of your consumer debt. You won't be able to avoid it in some instances, such as a mortgage or a car, but why enter it lightly?
How can you save money when buying an engagement ring?
Once you've decided what you want to buy, where you buy it matters too.
The worst place to buy it is in a physical store. It's the same reason why online banks have better interest rates than brick and mortar banks – the economics are different. The stores at the mall have overhead costs an online retailer won't. The rent, the cost of employees, the security, the insurance, not to mention shipping and huge marketing budgets responsible for the ads you see everything during the holidays.
Online stores don't have any of that stuff. Blue Nile and James Allen are two of the biggest online retailers.
Another reason is that many of the psychological tricks salespeople use will only work in person. When you buy an engagement ring online, there are no games or tricks. Just the diamond and the ring.
There are other tactics retailers can use but they're less effective. They may use scarcity (this is the only one left!) but they won't butter you up, try to be your friend, or offer up some fantastic financing deal you just can't turn down while plying you with glasses of champagne.
When buying, keep in mind that diamonds are rated one of two reputable major rating agencies – the Gemological Institute of America (GIA) and American Gem Society (AGS). They're both good rating systems and sometimes it comes down to the preference of the retailer and the diamond.
American Gem Society (AGS) Rating System
The AGS rating system rates a diamond on three C's (cut, clarity, color) with a 0-10 scale, with the highest rating being a zero.
For Cut (whole number increments):
- AGS Ideal: 0
- AGS Excellent: 1
- AGS Very Good: 2
- AGS Good: 3-4
- AGS Fair: 5-7
- AGS Poor: 8-10
For Color (half number increments):
- Colorless: 0.0 – 1.0
- Near Colorless: 1.5 – 3.0
- Faint: 3.5 – 4.5
- Very Light: 5.0 – 7.0
- Light: 7.5 – 10.0
- Fancy Yellow: Fancy Yellow
For Clarity (mostly whole number increments):
- Flawless/IF: 0
- Very Very Slightly Included: 1-2
- Very Slightly Included: 3-4
- Slightly Included: 5-7.5
- Included: 7.5-10
Gemological Institute of America (GIA) Rating System
The GIA rating system rates a diamond on three C's (cut, clarity, color) but doesn't use a simple 0-10 scale but has it's own letter rating system.
For Cut, they simply call it Excellent, Very Good, Good, Fair, or Poor. No numbers.
For Color, they use the letters D – Z:
- Colorless: E – F
- Near Colorless: G – J
- Faint: K – M
- Very Light: N – R
- Light: S – Z
- Fancy Yellow: Fancy Yellow
For Clarity, it's an acronym with subscript grades:
- Flawless/IF: Flawless/IF
- Very Very Slightly Included: VVS1, VVS2
- Very Slightly Included: VS1, VS2
- Slightly Included: SI1, SI2
- Included: I1, I2, I3
In the end, it's about finding the right gem for the right person – not necessarily the most expensive gem. If you have the means and the desire, buy whatever you want and spend whatever you want. It is your money, your life, and you shouldn't have to get permission to do things your way.
If you are looking for an engagement ring, give James Allen's engagement rings a look. They are one of the largest retailers and every loose diamond is conflict-free. They have a popup that gives you $100 off your first purchase when you join their mailing list.
If you would have to go into debt or if it would otherwise stretch you, give it a little more thought and see how this large purchase fits into your overall plan.