Understand how much you should pay for an engagement ring and how to buy a ring when you might not have the money
There are few milestones in life that everyone remembers, those flashes of our lives that we remember forever. That first exchange of an engagement ring is one of those times.
No matter how you feel about the cost of a ring, it’s a memory that you will regret if it’s not just the way you imagined.
Fortunately, there are ways to get the most out of your money when looking for an engagement ring and ways to pay for it if the perfect gem is a little out of your budget.
How Much Should You Pay for an Engagement Ring?
I hated writing that sentence! How much SHOULD you pay? Don’t tell me how much I should or shouldn’t pay!
But we’re not really talking about how much you should or shouldn’t pay for an engagement ring are we? What we’re talking about is how much is the lowest amount you can pay and still get a sparkling gem that your fiancée is proud to show off? We’re talking about how much should you pay to still create that perfect moment?
That’s going to be wide open to opinion but there are some ‘rules’ that people have used for determining how much you should spend on a ring.
- Two months’ of your salary is the one I hear most often so if you make about $37,000 a year then expect to pay just over $6,000 for an engagement ring.
- The average American spends $6,351 for a 1.2 carat center stone.
- The average engagement ring varies widely by state with the average price just $3,500 in Utah all the way up to $10,241 in California according to Blue Nile.
- The average engagement ring cost accounts for about 18% or one-in-five dollars spent on the total wedding.
How to Pay for an Engagement Ring when You’re Broke
An engagement ring seems to be one of those expenses that follows you up the income ladder. Like a house or a car, it’s not how much should you spend but how much can you afford. That seems blatantly unfair but here we are.
With the average American, both high- and low-income, reporting less than $1,000 in the bank for emergency expenses, that leaves pretty much nothing left for big ticket purchases like a ring.
For most people, that means borrowing the money to buy a ring and it could mean a debt trap just to say, “I do.”
I’ll show you how to get the best engagement ring for your money and the steps I used to buy a ring next but let’s get to the reason everyone is here. How do you pay for an engagement ring if you just don’t have any money?
Let’s weigh the options
Credit cards are the most common way to pay for a ring with 72% of buyers maxing out their plastic. At an average 28% interest rate, that means paying an extra $5,000 on the average ring over a five-year loan.
Another option many people turn to is cash advance and pawn shops at rates two- and three-times that charged on credit cards. On that same $6,000 loan and at an annualized 80% rate, that means paying over $24,500 back over five years.
The big problem with check cashing and other local loans is that you might not realize you’re paying that much in interest. The fee might only be $65 but you get trapped into a new loan every two weeks and end up paying thousands a year.
Finally is using a personal loan to pay for an engagement ring through a site like PersonalLoans or Upstart. While rates can still be high at an average 14% annual interest, it means under $2,400 in interest over five years. Adding that to the original cost of the ring still makes it pretty expensive but well below what you pay on other options.
Of course there are other ways to pay for an engagement ring like starting a side hustle or getting a second job but that’s going to take months to save up the money. It’s a great way to get the extra money to pay off a personal loan but most people don’t plan that far in advance to save the money to buy their ring outright.
So while a personal loan might still add a couple thousand to the cost of an engagement or wedding ring, it’s usually the best option available. The best part about using an unsecured signature loan is there are no pre-payment penalties. You can pay the loan off early with any extra cash and save on the interest.
I’ve used PersonalLoans.com for debt consolidation and a home improvement loan and it’s usually the website I hear most recommended. It’s always best to shop your loan around so I usually recommend SoFi and Upstart as well to make sure you get the best rate available.
How to Get the Best Engagement Ring for Your Money
The high cost of an engagement ring brings out the worst in retailers. It’s not enough to get you on the hook for thousands of dollars, they want to get as much from your pocket as possible.
The most important point to remember is that the high-end retailers will generally charge the highest price markup over their price for rings. Anything from Cartier or Tiffany’s is going to be more expensive just because it came in a box with the store’s name on it. These luxury retailers will mark their price up as much as 60% and higher compared to other retailers.
Better deals can be had on reputable online retailers like Blue Nile or James Allen where the price increase is usually 15% or less over the wholesale price.
Don’t be afraid to haggle over the price, even if it means only saving a few hundred dollars. Even getting a 5% discount on the listed price means you save $300 on a $6,000 engagement ring. That’s enough to pay for the engagement dinner and then some, and I guarantee some retailer will take you up on the discount.
How to Buy an Engagement Ring to Save Money
You can save even more still on your engagement ring as long as you know the process. I did my fair share of research before buying our rings and hope I’ll never have to do it again.
First, you absolutely have to set a no-budge budget. What is the maximum you’re willing to spend on a ring and stick to that.
Check your rate on a personal loan to set your budget – won’t affect your credit score
Next…do NOT take your fiancée along to pick out the ring. You can get her ring size by grabbing one of her rings while she’s not wearing it but for the love of all that’s Holy, do not take your fiancée when you go look at rings. It’s a no-win situation and the salesperson will always be able to guilt you into overspending your budget.
Understanding three of the four-C’s of diamonds will also help you save money on a ring.
- Color – You can save a lot of money here by going with a J-grade diamond which is about eight grades below a colorless D-grade but will still appear brilliantly white and noticeably better than a Z-grade yellow diamond.
- Carat – The average engagement ring is just under a carat in size. That might not be enough to choke Bugs Bunny but don’t let the salesperson guilt you into a four-carat mountain.
- Clarity – All diamonds have flaws and nobody is carrying around a jeweler’s loop to look at the rock on your fiancées finger. A general rule of thumb is that a VS2 or better diamond will appear flawless to the naked eye.
Being able to pay for an engagement ring when you don’t have any money means knowing how to get the best deal and understanding your loan options. Don’t let your rings put you in the poorhouse but don’t skimp too much on something that will last forever. Get the facts and get a ring you can afford.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.