Engagement Ring Budget Planning: Top 10 Questions Answered
15 years ago, when I launched Engagement 101, men were in charge of picking and financing the engagement ring. The industry recommendation on budget was for him to spend 2 month’s salary and to focus on finding a diamond with the best value possible. It’s 2021, and times have changed!
I wanted to better understand the current recommendations for financing/budgeting wedding jewelry, so I spoke with Craig Rottenberg who holds a master’s degree from the Massachusetts Institute of Technology Sloan School of Management and is the President of Long’s Jewelers (Burlington, MA) with a focus on managing the financial and marketing aspects of the business. I am so grateful to Craig for letting me pick his brain and ask him the 10 budgeting questions most on our community’s mind. He is such a great source of knowledge and gave some amazing tips.
Every budget is different. Look for a quality ring within a comfortable price range, and remember you can always restyle in the future.
1. How much should you budget for an engagement ring?
You can spend as little or as much as you’d like on an engagement ring. The average national purchase size is typically quoted around $5,000 to $6,000. We offer diamond engagement rings in precious metal starting at a few thousand dollars, but we have customers who want to spend hundreds of thousands too. Traditionally there have been guidelines around several month’s salary but I don’t subscribe to that. I recommend you find a quality style of ring that makes you both happy and is something you can comfortably pay for either up front or over a reasonable period of time (6- or 12-month financing for example). Remember you can always restyle and reset your diamond in the future if budget and tastes change down the road, which they typically do in a long marriage.
2. Are there any rules to allocate budget towards the setting and the stone?
Again, there might be rules out there, but I would focus on a complete ring that makes you both happy and can be the right symbol of your love. Some choose to put 95% of the budget into a diamond with a simple platinum solitaire setting. Others might put 50% or more into the ring setting because there is a unique design that speaks to them.
3. When resetting a family stone, how much should you expect to pay for a custom platinum setting?
If someone wants a white metal, we always recommend platinum because it is so much stronger than gold, it ages beautifully and it is a better value over time due to lower maintenance needs. The cost of the platinum setting though depends entirely on the style of the new ring. If someone wants to reset a diamond into a custom design platinum solitaire, you are likely looking at under $1,000. On the flip side, we have custom built a new diamond and platinum setting for tens of thousands of dollars. Custom might cost a little more than an already designed ring, but it shouldn’t cost multiples more.
4. Should you budget/buy your wedding bands at the same time as the engagement ring? Are there also any rules in how much you should save for them?
I think it depends on timing! If you plan to get married within 3 to 6 months of getting engaged, yes you should buy or at least budget for bands right away. If you plan on a longer engagement time, you will have plenty of time to pick out your wedding bands so take your time!
Take advantage of credit plans to help finance your ring and insurance to protect your important purchase.
5. Is it a good idea to take advantage of free credit plans? Do you offer any? Do you recommend any?
Absolutely. There are plenty of great options out there from both credible banks and online financing companies. I recommend going with a big, well-known name. Be warned though… you absolutely must be ready to make payments on time because the penalties and fees from missing a payment can be truly painful and costly. We work with Synchrony Bank right now and they do a great job for us.
6. Do you recommend insurance and what are couples expected to budget for that part? Is it better to add it to one’s insurance package or work with a company that specializes in jewelry?
We do recommend insurance on your engagement ring since it is such a big sentimental and financial purchase for most people. Insurance costs a small fraction of your diamond’s value (typically 1-2% per year of the value). If someone has existing homeowners or renter’s insurance, we suggest they contact their insurance company to list the ring separately and make sure it is covered. For those who don’t, we tell them that there are direct insurance options available to them for example with companies like Jeweler’s Mutual.
7. Is it okay for both partners to contribute to the cost of the engagement ring?
Be aware of potential future maintenance costs for your ring and how its value could change over time.
8. Are there any costs to expect down the road to maintain the look of your engagement ring?
Yes, there can be costs over the years to maintain both the look and integrity of your ring. Prongs should be checked a few times a year at a professional jeweler and sometimes need to be replaced to best protect your diamond. Typically, the smaller the diamond, the more likely it is to be misplaced which is why micro-pave halo setting more often lose diamonds and have a higher upkeep cost. A well-built ring should go years or decades without major issues, if you have it checked periodically. You can always have your ring repolished to shine it up or “dipped” to bring it back to a bright white gold. That’s another reason we recommend platinum because it stays a beautiful white color forever and has a natural patina that builds over time, relative to white gold.
9. Does an engagement ring lose value over time and how much?
It depends on many factors and of course, I can’t predict the future! For the setting, there is always an intrinsic value of the precious metal and the stones in the ring. So, if someone wanted to trade in or sell their ring, it would depend on gold or platinum pricing at that time. Since it is no longer a new setting, someone typically would not get close to the price they paid when they purchased the ring. For the diamond, it depends on market as well and diamond prices have been steady for recent years. I coach our customers to expect some value, but not as much as they paid.
10. Any tips to get a larger looking diamond on a budget?
The best bet is to first prioritize which of the 4Cs (cut, clarity, color, and carat weight) are most important to both of you. Then make trade-offs to get the best diamond on the budget. So, for example, you might want to get a large diamond (carat weight) and you love the sparkle of a well-cut diamond. Then trade off by lowering color from an F to an H and clarity from a VS to SI to get the largest, most beautiful diamond you can on your budget. That’s why we recommend seeing lots of diamonds in person, to better make those trade-offs based on what you see.