How Much Can You Spend on an Engagement Ring?

It's the pinnacle of romantic moments: the proposal, the sparkly ring, the kiss. But that dazzling piece of jewelry can cost a pretty penny and might involve a debt that will be carried into the marriage. Picking out a ring and determining a price range requires consultation and financial planning for many modern couples.

 

Old School Rules and Traditions

The origin of the diamond engagement ring tradition is not very romantic. It gained popularity after an ad campaign by the De Beers diamond company, which claimed, "A Diamond is Forever." Those who stand to profit, such as jewelers and diamond merchants, set the price you "should" pay for a ring at between one and three months' of your salary. Couples are not as tradition-bound these days as they were in prior generations, so don't apply this old school rule without giving some consideration to your budget.

 

Spending Your Own Money

You can plunk down cash without even talking to your fiancé about it if you have a large amount of money saved. The loss of the funds won't impact your bank account or your merged marital finances. But this isn't usually the case. If you're on a budget like most people, it's wise to talk matters over with your intended before incurring a debt that will affect both of you once you’re married, or before spending funds you could save for that first home.

 

Questions to Consider

The questions to consider before purchasing an expensive ring are the same you would think about before making any major purchase. They include both your earning potential and that of your spouse-to-be. Consider the state of your savings, how much debt you presently carry, whether you must go into debt to buy the ring, what kind of interest rate you'll pay, and how long you'll have to carry the debt before paying it off.

 

Consider Your Dreams and Goals

You've probably talked out your priorities as a couple, including goals and dreams for the future. If not, now's the time, before you tie the knot. In most marriages, a couple's finances are merged so it's critical to be on the same page about your financial priorities — whether you plan to go back to school, sail around the world or buy a home and start a family. You should also talk over other big expenses that often come up at the beginning of a marriage, such as the cost of a wedding or a honeymoon. Decide how much you can spend on an engagement ring after considering these factors. In the end, it's often a matter of choosing what's most important to you.

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