How Much Money Should You Spend on an Engagement Ring?

You’ve met your soulmate.

It’s time to propose. You know how you want to ask and where you want to ask, but what about the engagement ring?

Engagement rings are a sign of your lasting love and commitment. You can’t really put a price on something so symbolic, but you will have to. However, most people don’t know the national average price of a 1-carat engagement ring off the top of their head.

So how much should you spend on an engagement ring?

What Is the Three-month Salary Rule?

The “three months’ salary” rule is a traditional guideline that suggests spending three months’ salary on an engagement ring. This three-month rule of thumb originates from a marketing campaign the De Beers diamond company ran in the 1930s to encourage people to spend more on diamonds.

Not everyone is willing or able to spend 25% of their annual salary on an engagement ring. Your budget doesn’t have to be guided by a marketing gimmick. Determine a budget that is comfortable for you and your financial situation.

How Much Does an Engagement Ring Cost?

Engagement rings are available at a wide range of price points. You can spend $1,000, $5,000, $10,000, or more.

Many factors influence the average engagement ring cost, including:

  • The center gemstone
  • The design
  • The metals used
  • Where you buy it
  • When you buy it

What matters most is the bond you share with your partner, not the engagement ring price. 

How Much Should You Spend on an Engagement Ring?

According to a survey by the wedding website The Knot, couples spent an average of $5,800 on an engagement ring in 2022. About one-third of respondents spent between $1,000 and $4,000 on their engagement rings.

The age-old tradition of spending three months’ salary on an engagement ring is clearly no longer accepted. The three-month rule would have someone earning $70,784, the current U.S. median household income, spend around $17,700 on a ring. That’s a far cry from what people are actually spending.

Engagement Ring Budgeting

When determining how much to spend on an engagement ring, the first thing to do is focus on what you can realistically afford. You also have to consider your income, expenses, savings, and financial goals.

You can throw out salary-related rules or start with a smaller percentage, like 4 or 5 percent. See what that buys you by doing some comparison shopping. Determine how that amount would affect your finances.

You can also figure out how much to spend on an engagement ring by looking at it in the context of your total wedding budget. If you and your future spouse plan to elope somewhere cheap to keep wedding expenses down, you might splurge on a larger diamond. If you want a destination wedding and honeymoon, you could cut back a bit on the engagement ring and wedding bands.

Depending on how soon you intend to propose, you may need to find ways to scale back your spending or increase your income. You can put a little every month toward your engagement ring fund or you can put any and all extra money into it.

How To Buy an Engagement Ring on a Budget

Buying an engagement ring signifies a lifelong commitment. It’s a big decision with a lot to consider. It’s also a financial decision.

Here are 14 tips for buying an engagement ring that won’t blow up your budget.

1. Research Prices

Before purchasing an engagement ring, it’s essential to research prices. Visit multiple jewelry stores, both online and in-person, and compare prices. This will give you a better understanding of the average cost and help you find the best deal. 

2. Know What You Want in a Diamond

It’s essential to understand the 4 C’s of diamond quality: carat, cut, color, and clarity. The cut is the most important factor to consider. Cut determines the diamond’s brilliance and sparkle.

The Gemological Institute of America (GIA) system grades diamond cuts as Excellent, Very Good, Good, Fair, and Poor. Opt for a diamond with an Excellent or Very Good cut, even if it means sacrificing diamond carat weight. Grade doesn’t affect the price as much as other Cs and a well-cut diamond will sparkle and stand out when you nail the other Cs.

3. Choose the Right Cut

The most popular diamond cuts, such as round and princess, are more expensive. Consider choosing a less common cut, such as pear or marquise, which can save you money while still looking stunning.

Diamonds that weigh just under the most popular sizes can save you significant money without sacrificing quality or appearance. Instead of buying a 1-carat diamond, buying a 0.9-carat stone could be cheaper without a noticeable size difference. 

5. Add a Halo Around the Center Diamond

Pear-shaped diamond engagement ring with a double halo.

A halo is a circle of smaller diamonds surrounding the center diamond, adding more sparkle and making the center diamond appear more prominent. Adding a halo can make a smaller diamond look much bigger and save you money.

6. Consider Alternatives to Natural Diamonds

Lab-grown diamonds are becoming more popular, as they’re more affordable than natural diamonds but look identical. Another alternative is moissanite, a lab-grown gemstone that looks similar to a diamond but is more affordable. 

7. Choose Alternatives to Platinum

White gold is a popular choice as an alternative to platinum. While platinum is a more durable metal type than white gold, it’s also much more expensive. Opting for white gold can save you money while still looking beautiful.

Other alternative metals you might consider include palladium, tungsten, and cobalt. Less expensive metals can be as durable as platinum, look similar, and cost much less.

8. Replace the Center Diamond With a Gemstone

Rose gold cushion cut pink sapphire and diamond engagement ring.

Diamond engagement rings are the norm, but gemstones are cost-effective diamond alternatives. Gems such as sapphires, rubies, and emeralds are becoming more popular as center stones for engagement rings. These gemstones are often less expensive than diamonds but still look beautiful and unique.

9. Make Sure the Jeweler Has a Warranty Policy

When purchasing an engagement ring in person or from an online jeweler, find out about their warranty policy. A good warranty policy will cover any damage or repairs needed in the future, ensuring that your investment is protected.

The warranty will likely cover things like small scratches and prong replacement. There may be terms and conditions, though, like having to bring the ring in for inspections periodically. Understand what is and is not covered by the warranty before you plunk down your money.

10. Consider Bringing Your Partner With You

Traditionally, the marriage proposal and engagement ring are a surprise. Many go to great lengths to make their surprise proposal unique, unexpected, and memorable. However, there’s nothing wrong with couples choosing the engagement ring together.

Ring shopping can be another exciting experience you can share as a couple. It can also take pressure off you to find the perfect engagement ring on your own. There’s no guessing about ring size, yellow gold vs white gold, diamond shape, or setting style.

11. Negotiate

If you’re buying in-person rather than online, try haggling. Jewelry has a high markup, so there may be some wiggle room on price. Here are some things negotiating tips:

  • You might have better luck negotiating at an independently-owned shop rather than a chain jewelry store.
  • Don’t shop around peak sales times like Christmas or Valentine’s Day.
  • Shop when the store is less busy. Jewelers aren’t likely to negotiate with you in front of other customers.
  • Mention you’re shopping around and be willing to walk.

You can save hundreds of dollars, even if you only manage a five or 10-percent discount. You won’t get any discount if you don’t ask, though.

12. Look Into Financing Options

If you can’t afford to pay for the engagement ring outright, look into financing options. Many jewelry stores offer financing plans, allowing you to make payments over time. You can also find a credit card with a 0% introductory rate, use it for the ring, and pay it off as fast as possible.

Putting a high-ticket item on a high-interest credit card or payment plan can result in an enormous amount of interest over time. Carefully consider the interest rate and how the monthly payment affects your finances. You don’t want to start off your marriage saddled with debt.  

13. Buy a Pre-owned Engagement Ring

Man placing an engagement ring on woman's finger during proposal.

Buying a pre-owned engagement ring can save you significant money while still getting a beautiful ring. A vintage or antique ring guarantees your future spouse will have something unique that can’t be found at a mall jewelry store. Older diamond rings can be much more affordable than something newer from a big-name jeweler.

You might want to discuss it with your partner first, though. Not everyone will love the idea of a ring originally intended for someone else.

14. Get a Starter Ring

If you’re on a tight budget but still want to propose with a ring, consider getting a starter ring. A starter ring is a simple, inexpensive ring that can be worn until you can upgrade to a more expensive engagement ring. It’s a great way to still have a special ring for the proposal without breaking the bank or taking on credit card debt.

Buying the Right Engagement Ring for Your Partner and Your Budget

Your engagement ring will be the most important piece of jewelry your partner owns. It’s important to determine your budget before you start ring shopping and stick to it.

When determining your budget, consider your financial situation and what you can afford without causing financial stress.

It’s easy to get swept up in the excitement and go overboard with your engagement ring purchase. Stay within your price range. The price of the ring does not measure how much you love your partner or how committed you are.

You can find a beautiful ring that fits your budget by setting a spending limit, researching prices, understanding diamond quality, and considering alternatives. Remember to consider financing options, warranties, and bringing your partner with you to choose the ring. Whatever ring you choose, it’s important to remember that the love and commitment the ring represents truly matter.

Image credits: Unsplash