How Much Should You Spend On An Engagement Ring?

A podcast listener asks:

Any advice or rules of thumb for getting an engagement ring? The whole “3 months salary” thing seems impractical and outdated, in my opinion. In my mid 20’s, thinking about making the leap in the next year or so.

Someone gave me a similar rule of thumb when I was in the range of proposing to my wife.

This is a tough one because you’re bound to get plenty of conflicting advice.

Many people will tell you to suck it up and spend the money. It’s a right of passage. Just do it.

Others will approach this from the standpoint of a spreadsheet robot like they do with all decisions like this:

  • Don’t spend too much on a wedding.
  • Why pay so much for a dress you’ll only wear one day?
  • Don’t invite so many people to your wedding.
  • Do you really need to buy you that expensive diamond ring that you’ll probably lose at some point in the future anyway?
  • Just go to community college for two years and then transfer.
  • Take the six figures you were going to spend on college tuition and start a business.

These are all pieces of advice that sound good to an economist who doesn’t understand how the real world works.

I’ll admit now that I’m older the idea of a smaller less costly wedding makes sense. And my wife and I have even talked about how she probably didn’t need to get the diamond she has.

But we have the benefit of hindsight.

If our older selves were able to pull a Jonas and Martha and travel back in time1 to tell our younger selves how we now feel, the younger versions of us would tell the time traveler older us to get lost.

Maybe some people can approach these decisions from a purely financial perspective but most people make them from an emotional place.

Here are some things to consider as you go down the path towards buying a ring:

You will feel like an idiot if you don’t do some research first. Jewelers know more than you and they know how to sell. They know you don’t know anything about diamonds and will gladly use that against you.

There’s the microscope trick where the jeweler will point out flaws (or lack thereof) in a tiny little mineral that gets dug up from the earth like those little markings mean anything to you.

They will always have an informational advantage but you should still do some research before entering the battlefield on a jewelry store glass display case.

Don’t be afraid to negotiate. Sure, there is a market for diamond prices and De Beers owns like 98% of the world’s supply or something but jewelers won’t be offended if you bargain with them.

These prices aren’t set in stone. And the worst thing that can happen when you haggle for a lower price is they say no.

Negotiating is much easier if you shop around to different jewelers because it opens up your options if one of them is hard to work with or strict with their pricing.

Start saving ahead of time. Unless you’re spontaneous, you probably know months, maybe years, in advance that you’re going to pop the question.

So periodically start setting aside some money to make things easier. An engagement ring was basically my first big saving goal in my first job out of school.

Savings months ahead of time made things easier when I finally pulled the trigger.

Ask your partner for their input. I know it’s more romantic to pop the question out of nowhere and get the element of surprise but that story wears off pretty quickly. No one really cares if your proposal sounds like something from an early-2000s Mathew McConaughey rom-com.

Asking your future spouse to look at rings with you beforehand not only helps you avoid picking one out they will potentially hate but it can also lead to a useful conversation about finances before you get married.

They may still push you in the direction of buying something that’s over your budget but at least you know where you stand by having that conversation.

The only thing I remember when I went through this process with my wife is the size of the ring and the quality of the diamond. Get those two inputs and you can get a decent estimate of the amount you’ll be shelling out.

Use this process as a springboard to discuss finances as a future married couple. Involving your future spouse in this conversation also opens the door to a discussion about marriage and finances.

These conversations aren’t always easy because money is often a taboo subject. Most people are terrible at managing their finances and it’s rare to find two people who share the same beliefs about money.

That doesn’t mean you shouldn’t try.

It may feel like only one of you is making this purchase but eventually, you’ll be making big financial decisions together and this is a good test case for that process.

Ignore other people’s advice on how much you should pay. Some people are happy spending $50 on a ring. Others will gladly spend $30,000 or more. I have friends who got tattoos around their ring fingers instead of going the jeweler route.

There is no right answer except the one you and your future spouse decide on together.

Rules of thumb are meant to be broken, especially of the finance variety, because everyone’s circumstances are different.

Don’t feel pressured into spending too much or too little just because one of your friends/relatives/co-workers said you should.

Find a ring that works for your specific resources that will make everyone (but mostly your partner) happy.

Further Reading:
10 Money Revelations in my 30s

1If you haven’t watch Dark yet on Netflix it’s the greatest time travel show of all-time. It hurt my brain because it’s so complicated but I loved it.

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