Jewelry stores are not in the financial advice business—they’re in the Jewelry business. Don’t expect them to give you a reasonable estimate of how much you need to spend on an engagement ring.
When buying an engagement ring, a general rule of thumb is to spend at most one month’s income on it. And a one-month salary is usually more than enough to buy you a great ring to be proud to present to your future fiancé.
An engagement ring doesn’t have to be expensive, although that depends on what you mean by expensive. This article is about all you need to know to buy an engagement ring that doesn’t break the bank and impresses your partner. You know, hitting two birds with one stone.
How Much Do Engagement Rings Cost?
The average price for an engagement ring in 2020 was $3,756. That’s almost half what it was in 2018, $7,829. However, many variables are at play when buying an engagement ring for your specific situation, and sometimes you can get an impressive ring at half of what you would’ve expected to pay for it (more about this later).
One of the most common myths is that you must spend a two to three-month salary to buy an engagement ring, but this is not true. It’s just a marketing stunt that the diamond industry pulled to see if it worked, and it did.
Anyway, here’s the price range of engagement rings by carat size. These are just rough estimates.
- 0.25 Carat Engagement Ring (Very Low Income). Not to be cheap or anything, but you can get a diamond ring for less than $500 that can do the job. Generally speaking, a 0.25 ring typically costs somewhere between $275 to $440.
- 0.5 Carat Engagement Ring (Low Income). A 0.5 Carat Engagement ring is still on the low-income side. Still, it’s as good as any ring if you and your partner believe love is above materialism. You can get one at somewhere around $1,000 to $1,500.
- 1 Carat Engagement Ring (Middle Income). Depending on the diamond’s color, clarity, and cut, the price range for a 1-carat ring ranges from $2,000 to a whopping price of $16,000 or more.
- 1.5 Carat Engagement Ring (Mid-Mid-Income). If you can spend up to $10,000 without suffering a major blow to your finances, consider getting a 1.5-carat ring. The price range is from $4,000 to $30,000. However, getting one that ranges from $8,000 to $10,000 ensures you get a good stone.
- 2 Carat Engagement Ring (High Mid-Income). We’re approaching the 1 percentile as we get further into this list. A 2-carat engagement ring can cost anywhere from $8,000 to $70,000. And similar to the above entry, anything from $18,000 to $21,000 should get you a decent ring with an excellent color-clarity-cut combination.
- 3 Carat Engagement Ring (High Income). The price seems to grow exponentially, does it? Well, wait until you see this. A 3-carat ring can cost anywhere from $20,000 to $200,000.
- 5+ Carat Engagement Ring (Super Rich). A 5-carat ring costs from $9,350 to $147,400 per carat. If the carate is set at a price of $100,000 per carat, that would be $500,000. So, you can only imagine what a 10.48-carat ring can cost. As a matter of fact, that’s the carat size of the world’s most expensive engagement ring, Cartier, which was owned by Grace Kelly; it’s worth $38.8 million. Now, it’s the property of the House of Grimaldi.
With the online diamond business becoming more mainstream and the availability of lab-grown diamonds, you can get a hold of an excellent ring without having to pay for it with a kidney. As long as you’re hiring a diamond expert to assist you, you’ll get a good deal on a ring without getting scammed.
What Determines the Price of a Diamond?
I’m not sure you’re ready for this, but there’s a whole complicated grading system and institutions that determine the price of a stone. Do you want to read accurate information from a gemologist? You can check out this article about What Determines a Diamond’s Cost by Gem Society.
There’s this giant diamond corporation called De Beers that has the power to control the price of diamonds because it owns 35-40% of the world’s roughs.
Check out this video about the sinister story behind De Beers:
And aside from the grading system, you’ve probably heard about the 4 Cs (Color, Clarity, Cut, and Carat). There’s this thing called the “rap list.” The rap list was established in 1974 by Martin Rapaport as a benchmark to grade diamonds and calculate their price. Unfortunately, the rap list is exclusive, which means you can only access it if you’re in the diamond business.
Nevertheless, you can use this calculator by The Diamond Pro to get a rough idea of how much to spend on a diamond. However, according to the experts, it’s not always reliable. It doesn’t account for all the variables that determine the quality of a diamond and, in turn, its price.
Things To Consider When Buying an Engagement Ring
Last but not least, the main purpose of an engagement ring is to make your partner smile. Don’t fall for the jewelers’ sales tactics and mental gymnastics.
The jeweler will tell you things like the ring will go in value in the future and whatnot. But according to financial advisor Dave Ramsey, an engagement ring should never be seen as an investment. They’re not a good investment. Here’s a YouTube video where he explains his reasons:
As far as you’re concerned, if a beautifully cut stone with a reasonable carat size is enough to make them smile, that’s all that matters.
Final Thoughts
And now that we’re in this territory. The size of the carat doesn’t necessarily have to express anything about your love.
As Ramsey says: “There’s ZERO correlation between the size of the diamond and the success of the marriage. As a matter of fact, there might be a negative correlation at some point that the diamond gets too big.”
If you found this article useful, make sure you save this pin below to your Wedding/Engagement board.
