How much should you spend on an engagement ring? What is the average cost of an engagement ring? How can I save money on an engagement ring? These are all questions asked by those looking to get engaged.
According to a survey from The Knot, the average amount spent on an engagement ring is $5,855. You could buy your love this $114,000 ring, which makes $6,000 look cheap!
However, you should think twice before spending that much money on a rock. Yes, you might be in love, but here are a few things to consider…
What are your future goals? Take the time to sit down with your partner and discuss your financial goals. I don’t mean just a ring and a wedding – I mean a down payment on a home, preparations to start a family, and of course, retirement planning. This is a perfect time to explore each other’s money values and understand how you can put your lives together.
Let’s assume you’re 25 years old and you’re about to spend $6,000 on an engagement ring. If you put that money into an account returning 8%, you’d have over $130,000 by the time you retire at 65. Plus, if you haven’t even bought a home yet, $6,000 could be a down payment on an FHA loan. These are just reasons not to break the bank on a ring.
Whatever you do, do not finance your ring. Most jewelers will entice customers with six months or a year with no interest, but if your ring isn’t paid off within the promotional period you could be charged 20% or more of the total price. Don’t dig yourself in a hole trying to get a marriage off the ground.
If you have a credit card that offers rewards and you can pay off the balance in full, load that sucker up! You can apply the points towards a flight for your honeymoon. If you must buy in a store (which I don’t recommend), pay cash and negotiate a bigger discount since no credit card processing fees will be involved.
Anyway, when you’re ready to take the plunge into happily married bliss, be sure to keep the following tips in mind. You’ll save a lot of cash!
1. Browse in stores, buy online.
Here’s the problem with buying an engagement rings – you can get a WAY better price online, but you want to know what you’re buying. I recommend that you shop for engagement rings like you’re buying a car. You wouldn’t walk into a dealership and just ask for the cheapest car. You’d want to know the specs, the pros and cons, the tradeoffs, etc.
If you’re like most guys, you’re not an expert on diamonds. Nor will you ever be. Therefore, it’s a good idea to get some help from in-store professionals who can walk you through the different types of color, cut, clarity and carat. Once you do this enough, you’ll get a feel for what you like and don’t like and you’ll be ready to purchase. However, most retail outlets are ridiculously overpriced. It’s better to buy online.
When you know what you want, you can hundreds, and sometimes thousands, by buying online. While it is safe to buy online (most places offer insurance too), you shouldn’t buy a diamond unseen. That’s why I recommend James Allen. Not only do they have great prices, but they are THE ONLY site that has real pictures of all the diamonds in their inventory. You know EXACTLY what you’re getting and you’ll get a great price too. Plus they have wonderful customer service, so you can contact them and ask whatever questions you might have.
People like round numbers, and it’s a good guess that your partner wants a nice, 1-carat diamond. After all, it’s the most popular carat. But, whenever there is a ton of demand for something, the price goes up. The cool thing is that you can save a lot of money by getting a slightly smaller size, such as a .97 carat.
There’s about a 30% price difference between a .9 carat and 1 carat. Don’t be stupid and pay thousands just for a round number. She’s not going to know the difference anyway.
3. Get a lower clarity and color.
Jewelry salespeople might tell you that you shouldn’t skimp on quality, or give you the feeling that you’re being a cheapskate, but it’s not that big of a deal. If you can’t detect the difference with your naked eye, what does it matter? The point of an engagement ring isn’t to be an investment, it’s meant to look pretty. You don’t need the highest clarity in order for the diamond to look amazing. If it has imperceptible imperfections, you will be the only one who knows.
When it comes to color, you should get a diamond with the lowest color grade that still appears white. Because diamonds are graded compared to a master diamond, some diamonds get a lower grade. This means that you can tell the difference when compared to a near-perfect diamond, but on its own, a lower color grade will still sparkle.
4. Purchase in the summer.
I mentioned at the beginning of this post that we are in engagement season. Some people think that June through August is the worst time to buy an engagement ring because of all the summer weddings taking place. On the contrary, the summer is a great time to buy.
Weddings might happen during the summer, but engagements happen year round. Pricing is especially volatile around Christmas because of the pressure to find a ring on Christmas morning. Summers are slow for most jewelers and wholesalers, so they’ll be a little more flexible and try to push inventory, getting you a good deal.
5. Get a non-traditional shape.
Let’s come back to simple supply and demand – since most people want to buy a round diamond, the price is higher. If you want to save some extra dough, look at different shapes, such as princess, square, oval, etc.
6. Only buy GIA-certified.
The Gemological Institute of America is the biggest governing body on diamonds. You should only buy GIA-certified diamonds if you’re looking for value because they have the most consistent grading lab. Why is this important? Well, if you use another institute, they might not have as consistent a lab, which means their diamonds carry noticeable discounts for a reason. There will always be a tradeoff!
7. Get 14K instead of 18K gold.
You might think that 18k gold is a better buy because of the higher number, but this isn’t necessarily true. Just treat 18k like a brand name, since it is technically purer than 14k but it doesn’t offer any extra raw value. If you opt for the 14k instead of the 18k, you’ll pay a lower price and you can keep it brand new by polishing it once per year.
Although you should never treat your engagement ring as an investment item, gold provides decent investment value, since gold prices have risen steadily over the years. Yet, extra demand can put an even higher price tag on gold. For example, yellow gold is back in style with a vengeance, driving up the price.