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You may have heard the old rule of thumb that you should spend three months’ gross salary on an engagement ring. However, this guideline — promoted by the diamond industry to enhance sales around the start of World War II — is no longer considered realistic. To put the three-month rule into perspective, someone making $50,000 per year ought to spend a whopping $12,500 on the engagement ring.So, how much should you spend on an engagement ring? The answer will depend on several factors, including your income, preferences, other wedding expenses, and savings. Read on to learn the average cost of an engagement ring, plus how to budget for and buy an engagement ring.
How Much Should You Spend on an Engagement Ring?
Most couples today (many of whom are saddled with student loan debt and high costs of living) don’t follow any rules about how many months’ salary they should spend on an engagement ring. In fact, the median American spends roughly 4% of their annual gross income on an engagement ring, which translates into about two weeks’ salary. However, how much you should spend on an engagement ring is a very personal decision. Some factors you may want to consider include:
How much you plan to spend on the wedding and honeymoon
Where you live (prices vary from place to place)
Your current and potential income
How much savings you have
Your partner’s preferences
Understanding Your Engagement Ring Budget
When coming up with how much you should spend on an engagement ring, you may want to start by researching how much the type of ring you and/or your significant other is envisioning can cost. After doing some research, you may need to adjust expectations to come up with a target amount you’d like to spend. Next, you’ll want to consider when you want to propose. If you’re thinking about popping the question in 12 months, you’d want to divide the ring’s cost by 12, then start having that amount automatically transferred from your checking account into your savings account each month.However, not everyone has that long a timeline. If you don't have enough cash currently on hand to pay for a ring, nor enough time to save up, there are options for financing an engagement ring (more on that below).
Buying an Engagement Ring
When you’re buying an engagement ring, it pays to be an informed consumer. You’ll want to do your research about the “four Cs” (Cut, Clarity, Color, Carat). If you’d rather see and touch the ring in person before you buy it, consider shopping at one of these outlets:
National retailer
Private jeweler
Wholesaler
Trunk show
Your local diamond district (many cities, not just New York, have them)
You may be able to save some money, however, by shopping online. Many diamond websites allow you to search for stones based on your preference in each of the four Cs, and even help you create your own setting.
What Is the Average Engagement Ring Cost?
According to The Knot’s 2021 Jewelry and Engagement Study, the average cost of an engagement ring is currently $6,000. That said, there are many different factors that impact the cost of an engagement ring and there are an endless amount of gorgeous styles to choose from that can suit any budget. Many couples now opt for alternatives to traditional diamonds, such as sapphires, emeralds, moissanite, or lab diamonds, which can be more affordable.The Knot study found that roughly one-third of couples spend between $1,000 to $4,000 on their engagement ring, and 8% spend under $1,000.Recommended: How Much Does an Average Wedding Cost?
Average Engagement Ring Cost by Shape
The center stone typically costs about 75% of your total ring budget, with the rest of the cost going toward the setting. Popular settings tend to run between $300 and $1,500. Surprisingly, the shape of the stone has a big impact on the cost of the diamond. Diamonds need to be cut and shaped before being set into a band. The more that gets trimmed off, the higher the cost of the end result. For example, a princess cut diamond uses 80% of the rough diamond’s carat weight, while a round cut only uses 40%, making it the most expensive diamond shape. The princess cut can be a good choice if you’re looking for a large diamond, but don’t want to splurge on a round brilliant cut.
Average Engagement Ring Cost by Carats
The average cost of engagement rings also depends on the diamond’s carats. Carat refers to the weight of a diamond and, generally, the higher the carat, the higher the cost. The average weight for the center diamond in an engagement ring is 0.8 - 1.2 carats. A one-carat diamond engagement ring costs an average of $5,500.
Average Wedding Band Cost
When thinking about how much to spend on an engagement ring, you’ll also want to factor wedding bands (for both of you) into your budget. Fortunately, wedding bands generally cost a lot less than engagement rings. According to The Knot’s Jewelry Study, the average cost of a female wedding band is $1,100, while the average cost of a male wedding band comes in at $550. The survey also found that white gold is the most popular wedding band material. Rose gold, yellow gold, and sterling silver are also popular choices.
Financing Options for an Engagement Ring Cost
Whatever you decide to spend on an engagement ring, you may not have the cash on hand to pay for it outright. Fortunately, there are a few different financing options you can consider.
Family Loans
If you need some help affording an engagement ring, you may want to consider asking a close family member for a loan. They might choose to loan you the money with or without interest.If you go this route, it can be a good idea to write up an informal promissory note that details how much you are borrowing, when you will pay it back by, the interest rate (if any), and whether you’ll pay in installments (such as a certain amount per month), or in one sum by the loan’s due date.
Credit Cards
Buying an engagement ring with a credit card is also an option, but you’ll want to be careful here, since credit cards come with notoriously high annual percentage rates (APRs). If you can pay for the ring when you first get your bill, or soon thereafter, though, using a credit card can be a good way to earn points and cash back — especially if you are putting other wedding expenses on your card. If it will take you some time to pay off the engagement ring, you might want to look into getting a card with a 0% promotional APR. These deals often last 12 to 18 months. If you can pay your balance within that time, this will give you interest-free financing.If you don’t qualify for a 0% APR credit card, you might be able to sign up for a store card with the jeweler. Sometimes these cards offer a special 0% interest period. Just be sure you can pay off the card before that period ends or you could end up paying high interest and fees.
Personal Loans
A personal loan can be used for virtually any type of personal expense, including engagement rings and other wedding expenses. In fact, some lenders even offer personal loans advertised as “wedding loans.” If you have strong credit, personal loans generally offer lower interest rates than credit cards, which can make this a more affordable way to finance an engagement ring.
The Takeaway
The average engagement ring cost runs around $6,000, but there’s no rule that anyone needs to spend that much. You may choose to spend significantly less on a ring, or well over that price, depending on your income, your (and your significant others’) preferences, and your total wedding budget.Paying for an engagement ring in cash is ideal, since you won’t pay any interest on top of the cost of the ring. If you don’t have that much savings sitting around, however, you may want to consider borrowing money from a family member or financing the ring with a no- or low-interest credit card. Another option is to take out a personal loan. If you’re curious about what type of personal loan you might qualify for, Lantern by SoFi can help. With our easy online lending tool, you can compare multiple personal loan offers matched to your wedding needs and qualifications all in one place.
Frequently Asked Questions
How much does the average engagement ring cost?
Can you use a personal loan to cover the cost of an engagement ring?
What are the financing options when buying an engagement ring?
Photo credit: iStock/Kobus Louw
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About the Author
Jacqueline DeMarco
Jacqueline DeMarco is a personal finance writer and editor based in Southern California. While she spends the bulk of her time writing about complex financial issues, she also tackles a variety of subjects ranging from food to fashion to travel. Her work can be found across dozens of publications such as Credit Karma, LendingTree, Northwestern Mutual, The Everygirl, and Apartment Therapy.
