Determining how much to spend on an engagement ring can be a hard thing. This is especially true due to there being many different engagement ring buying rules out there.
The most known engagement ring budget rule is probably the three month rule. This is where the engagement ring buyer determines how much to spend on an engagement ring based on what they make over a three month period.
So, if a person makes around $3,000 a month, that would mean that the engagement ring “should” cost around $9,000 according to the three month ring buying rule.
That is a ton of money for someone to spend on an engagement ring, especially when that’s just a total income of around $36,000 a year!
I am going to say OUT with this old ring buying rule.
Spending 25% of your annual income on an engagement ring just seems crazy.
Insane even.
I know I’ll probably get some flack for saying that, but I think busting your budget for an engagement ring is usually not a good idea…
Here are my tips to help you determine how much to spend on an engagement ring:
Create your own engagement ring budget.
When determining how much to spend on an engagement ring, you should first create a budget.
Throw out any rules that you have ever been given when it comes to buying an engagement ring and create your own budget.
Everyone lives different lives, and for there to be one single rule to apply to everyone just doesn’t make any sense.
When creating your engagement ring budget, you should think about:
- How much debt you have;
- How much your wedding will cost and whether you can afford it;
- How you want to start off your marriage financially;
- Whether you are making more money than you spend each month;
- Your financial goals; and more!
Save up exactly what you need before you buy an engagement ring.
Before you set out for the jewelry store, you should try to save up as much money as you can for it. This is so that you can skip the financing when deciding how much to spend on an engagement ring.
Financing a ring is something that you almost always want to skip, unless you know exactly what you’re doing, such as if you are given a 0% interest rate and you know how to 100% use it to your advantage (such as by already having that money saved up).
Financing is usually a bad idea because it can cause you to spend more money on an engagement ring than you can actually afford. When something is divided into monthly payments it may seem more affordable to a ring buyer, when in reality it is not!
Find an affordable engagement ring.
There are many affordable engagement rings out there. You don’t have to spend a ton of money on an engagement ring if you do not want to.
Also, if you want to spend a ton of money on an engagement ring, there is nothing wrong with that either! As long as it’s in your budget, you can do whatever you want to do. No one is going to stop you, but my piece of advice is to make sure that buying that expensive ring doesn’t stop you from reaching your financial goals in life.
Here are my tips for buying an affordable engagement ring:
- Buy less than a full carat size. For example, instead of buying a ring that is 1 full carat, you could buy one that is 0.90 or 0.95. This is because many diamonds are cut to the exact amount, and buying something that is slightly less means that the value has gone down. The difference is so insignificant anyways so it can be a great way to save money, and it’s not like anyone would ever notice.
- It’s not always about size. If your budget isn’t that high, it’s usually better to go for a more quality ring instead of focusing just on size.
- Buy diamonds which are eye-clean although possibly not internally flawless in order to save money on an engagement ring. Who is going to go up to the engagement ring with a magnifying glass anyways? As long as it looks great to you, I’m sure it’s still a good choice.
- Buy an engagement ring online. Buying online usually means cheaper prices and a greater selection.
- Go for something different. There’s MoissaniteCo (if I ever need a new ring, a moissanite ring is one I will probably get!) where you can get a beautiful moissanite ring for an affordable price. Or you could even go for a different gemstone and save money over having a diamond.
How do you think a person should determine how much to spend on an engagement ring? How much have you spent on an engagement ring or how much is the one that you’re wearing?
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The rule of thumb of buying a ring that costs 3 months salary is truly insane! I like the idea of more unique engagement rings, maybe with other stones instead of a diamond. Other stones are equally beautiful but cost a whole lot less!
I agree! I love unique rings.
I will probably get backlash for saying this, but I didn’t want an expensive ring at all. Quite frankly, there are more important things like the love you have and when it comes to the ring — the things you want together in your future to spend that kind of money on. My ring cost very (and I mean VERY) little and I get compliments on it all the time. I’m also somebody who had a very small wedding with 15 people in my family home, so I’m probably not the leading expert on this stuff. I just think it’s ridiculous the money people drop on things like engagement rings and weddings. I’m not trying to put people down for having expensive rings or big weddings, I mean if you HAVE that kind of money, go for it. I’m talking about people who are struggling financially to afford the cost of an extravagant engagement ring who hang themselves out financially for years paying for it all.
Yes, I know exactly what you mean. My ring was very affordable. Whenever I tell people that, they don’t believe me. I love my ring and it’s definitely possible to find a beautiful one for an affordable price.
The advice of “Skip the financing” solves a majority of people’s problems. That way, you buy only what you can afford. And if you’re in debt you buy way less than you can afford. Nothing looks as good as living debt-free. I think you’re exactly right in asking that list of questions about your financial future. Actions today have consequences tomorrow.
I’m probably in the majority, but I’ll say it anyway – you can always upgrade later!
Yes, you can always upgrade later if you truly want to!
I don’t even want a ring, for a variety of reasons. I don’t wear jewelery, the diamond industry is pretty much evil, I hate the symbolism of it (I don’t mind wedding rings since both wear them), and I think it’s insane to spend that much money on a ring. I hate when people say “I’ll propose when I can afford the ring.” What the hell? If you love someone, want to spend your life with them, do it! You don’t need a freakin’ ring, or an expensive wedding.
I have somewhat strong views on the matter 🙂
I agree with this!
Same here Erin!
Haha All great views to have Heather!
I made my husband get an engagement ring too. I told him that if I had a big ole “back off!” sign, he’d have one too. He got a cool sapphire one, so he was happy to comply.
Wes actually just broke his rubber ring (he has a “real” one but it scratches everything up) that he wears 24/7 so now he has nothing to wear. I need to get him one!
I agree completely with you and the comments. I think another big mistake couples make is convincing themselves that a large expensive ring is an “investment”. An investment is something of value you’d be able and willing to liquidate for cash. An engagement ring should be a symbol of enduring love not something you hock in a pinch. The biggest factor is that resale value on a ring is usually only 10-25% of what you paid for it. Generally the only way you get more than that is if you trade it in for a more expensive piece at the original jewelers. An investment diamond should be flawless, preferably colored, and 3-5 carats or larger. 2 carat stones and smaller are a dime a dozen at any jewelry store.
Yes, exactly! It shouldn’t be considered an investment.
Yeah…my parents don’t even wear their wedding rings and I don’t even recall ever seeing an engagement ring…and they’ve been together for longer than I can remember and they still love each other. They had a small wedding, too. Your relationship and having common values are more important than some ring. If she whines and complains that much, she probably isn’t the girl for you anyways. She should love you because she loves spending time with you and wants to share her life with you, not because of some ring; sorry. So after you go broke and become indebted buying her some ring just so she can show off to friends and family, there’s no money left over for a house, raising children, etc? No thanks.
I agree!
Great post Michelle! For me, an expensive engagement ring is not the end all be all. I would actually feel slightly guilty if someone spent 3 months’ salary on my engagement ring. I would much rather put more money into building a life together. Shopping online and avoiding financing does seem like the way to go though.
Yes, I would rather put that money towards something else!
I agree completely with you and everyone in the comments. Spending that much money on a ring is beyond ridiculous. My engagement ring cost around $200. For our wedding bands we actually melted down my grandparents’ platinum bands and had them reformed into simple bands in our size. It was far more important for me to have something with meaning than something that had to be financed for three years.
Wow that’s an awesome idea!
Thank you, Michelle!
Welcome! 🙂
Great idea!
Yes, probably created by them!
3 months salary is crazy! Granted we tend to have the same views since we are all following a personal finance blog 😉
I have 2 friends, 1 made her fiance pay 6 grand (mind you he only works side jobs) for a ring because she is all about the show, and then my other friends husband made her upgrade her ring so “all of her friends could be jealous”, I wish I were kidding. I’d love for you (if you haven’t already) do a blog post about how to handle close friends who are absolutely ridiculous with their spending, I have plenty of examples I can send you to make it nice and meaty! 😀
Haha very true. Everyone’s comments today are pretty similar. I wonder how everyone else feels!
It doesn’t make sense to spend so much on an engagement ring, when I first heard about that 3 months “rule” I thought “people are totally insane”. Guess what, that “rule” was put in place by the same people who are selling you those rings…
An engagement ring is something you choose in a way that it will mean something to you and your partner. In our case, I chose a beautiful ring from Dior that had the word “OUI” in French on it (that means “Yes”). It particularly worked for us because I’m French (my wife is not), and because “yes” is the best message to show for an engagement ring.
The best thing is that this ring wasn’t really expensive. I can’t remember today how much I paid for it, but it was somewhere between $200 and $500.
My point is, there is jewlery out there than can carry a longer term meaning to your relationship than a stupidly expensive piece of highly compressed carbon.
also, my wife would have killed me if I had spent 3 months of salary on a ring. I guess choosing the right mate that focuses on long term financial goals is also part of the game. If your partner expects you to spent 3 months of salary on jewelry, your future goal of FI is at risk as a couple 🙂
I would have killed my husband as well if he would have spent three months salary! I would have made him return it haha.
Completely agree, but then I’m a man.
Many many women are insanely competitive in a passive aggressive manner, e.g. earlier comments about making her friend insanely jealous.
The ring conversation is a great test for your potential mate. If she prioritizes wasting your money, she’s going to waste “our” money once you’re married, so, bluntly, you’re better off without her.
Personally, I used Blue Nile to purchase the diamond and had a local artisan make the ring. Great selection and savings, and I could use Mr. Rebates to get a nice chunk of cash back. Win and win.
Good job on using Mr. Rebates as well! Another great tip.
Ha, you know it’s a good post when I have no intention of getting engaged but I still read it. 🙂
I also love the idea of 3D printed rings. Low cost but super personal/clever.
Haha glad I was able to grab your attention 🙂
Well, you know that the three month rule was put into place by the top company that mines and sells diamonds, so for them, it’s a great rule! For consumers, it doesn’t make as much sense.
It doesn’t make sense at all, I agree.