Let's Talk About Budgeting of Buying Diamond Rings

About Budgeting

Buying an engagement ring is a significant investment. I don't own a house and my cars have always been bangers, so the ring I chose was by far the most expensive thing I'd ever bought. But how do you decide how much to spend?

As I mentioned previously, two, or even three, months' salary rule was a recent idea and not something you should wory about. However, as it turns out, the average ring price does work out to be roughly two months salary, after tax. The stats are similar across all Western countries, but, for example the average salary in the US was $49,000," while the average price of engagement ring was around $5,300. In this article I'll talk you through some of the things to thought about when deciding how much to spend. I'll also let you know what you can get for your money and then later in the book we'l look at what you can do to make your money go further.

Setting a budget that's right for you

The most important thing with budget is to decide how much is right for your situation, and your beliefs. I've got 100% Scottish blood running through my veins, so I'm always looking for a bargain and keen to get as much value for money as possible. I'm a keen discount coupon collector and always take a packed lunch to work to avoid spending money on store-bought food.

At the same time, I'm not afraid to invest in quality. I've got a couple of expensive pushbikes and not even under the pain of nipple-clamp torture would I tell my other half how much they cost. I like to spend money on good quality clothes that will last, rather than disposable stuff from the high street. So I was happy to spend a decent chunk of change on a quality ring because it is something we will keep forever.

Different people have different attitudes and spending habits though. I have some friends who buy a new car every other year and think nothing of splashing $1,000 on a Dior handbag. But then there are others who will only shop in thrift stores, not because they want to cultivate a shabby hipster vibe, but because they just can't face spending their money on new clothes.

What's important is to think about yourself and the value that you, and your girlfriend, place on material things. For some, a flash diamond will be a symbol of just how big their love is, while for others a simple token of commitment is all they need. A good way to look at it is to fast-forward a year and think about what you would feel comfortable having paid.

If you think that you'll have pangs of regret and break into cold sweats at having spent so much, then revise your budget down. In the end, it needs to be an amount that you're comfortable with, rather than going with what you think is expected.

Borrowing to pay for the ring

Although many people have tightened their belts following the credit crunch, a lot still rely on credit cards, especially for big purchases. Whether you stick your engagement ring on plastic is your call, but I would recommend you borrow only as much as you can honestly afford.

Feeling stressed about repayments or hiding how you paid for the ring from your partner could spoil the golden period of the engagement. Weddings are expensive period enough and you don't want to go into the planning process already in debt from the engagement ring. For me, saving for a ring was a gradual process, putting away a ittle at a time for a couple of years while we also saved towards a house deposit. This meant I was especially careful when choosing the ring as it was my money I was spending, rather than the bank's.

Top-level guide to ring prices

You might already have a rough idea of how much you want to spend, but if you haven't started looking at rings yet, you may not know how much a ring actually costs. At the beginning of this article, I gave you the average figure for a diamond engagement ring in the US, $5,300, but what do you get for this and what if you want to spend more, or less?

There are a huge number of factors that affect the price of an engagement ring, so at this stage I'l only give your very top-level guide. I'll look at this in much more detail in my later articles: Making Your Money Go Further.

Around $5,000 will get you a high quality diamond of around 0.8 carats, or a 1 carat diamond with some compromises. Often a 1 carat diamond in this range will have issues with colour or cut, which can affect how much they sparkle. Choosing a stone smaller than 1 carat will mean that you have more budget to spend on some of the other characteristics that make up a quality diamond- you'l find out more about those in my later articles.

Spending a little more, say $7,000, will get you a quality 1 carat diamond in a good setting, possibly with some small sides stones too. Dipping below the average - between $2,500 and $3,500 and you should get a high quality diamond of about 0.5 carats. Although you can get 1 carat weght of diamonds at this price, it would be made up of several smaller stones instead of one whopper on the middle.

Under $2,500 with diamonds and you'll have to compromise on the setting - choosing a cheaper metal for the band. Below $1,000, the diamonds will be less than 0.5 carats with quality issues that affect their sparkle. If this is your budget it would be worth looking at an alternative to a diamond - another semi-precious gem.

I will talk about more about how you can get the most value for your budget in my later writings, but hopefully this top-level info is useful for you as you start thinking about ballpark figures for how much you are going to spend and what type of ring you will be able to buy.

My Conclusion

The one thing that you need to take away from my thought is that the amount that you spend on an engagement ring needs to be an amount that you are comfortable with. Don't succumb to pressure to conform or to spend a certain amount - you want to be able to enjoy the engagement without sweating about making repayments on the ring.