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How Much Do You Really Need to Spend on an Engagement Ring?

Published October 9, 2020

5 minute read

David Ning

By David Ning

The pandemic had put the wedding industry mostly on hold. However, we are now starting to see more and more people think about tying the knot again. Just last week, I had two of my friends announce their engagement. I don’t dare to claim I know everything about why the ring is such a big deal. But to many, the rock on the bride-to-be’s finger can sometimes generate a bigger conversation than the significant event itself.

Still, some people are saying you need to spend three month’s worth of salary on the rock. Some of my friends make $100,000 a year. Do they really need to spend $20,000 to $25,000 on an engagement ring? Will the girlfriend say no if she sees jewelry that’s not as extravagant as she hoped? As with most things finance, the choice is completely personal. But what type of pressure are we putting on the groom-to-be here?

The Engagement Ring Rule of Thumb

Let’s talk about the rule of thumb first. The commonly accepted idea is to spend three months’ salary on an engagement ring. Like I said, some of my friends make six figures a year. While $25,000 sound incredible to spend on jewelry, it’s actually more incredible to expect someone who makes $3,000 a month to spend $9,000 on an engagement ring. That’s because someone making $3,000 is probably not saving an awful lot, especially if he’s living on his own. That $9,000 could amount to years of savings.

Is a groom expected to start their financial journey from scratch again, just because he wants to commit to the relationship? Yes, spending a fortune does, in a way, show how much he’s willing to commit. However, it could be bankrupting the future husband before his new life even gets stared. I guess it’s still better than borrowing money on his credit card to buy a ring, which is sadly very common.

Here’s the Truth

The “how else can three months. salary last forever” schtick? It’s fake. Completely made up. It’s nothing more than marketing slogan invented by companies wanting you to spend more on their rings. That number is nuts to me, to be honest. This rule of thumb means an engagement ring basically costs as much as a common sedan. That’s crazy. Don’t put yourself into a major financial hole just because you’ve been swayed by some nifty advertising. Do some math and make a choice that you can live with — and pay for.

Age Matters

The three months’ salary can make sense, I suppose, for young couples who are starting out if they are going to be sharing the financial responsibility. When my wife and I got engaged, I just started working and three times my monthly salary wasn’t that much yet. We were also moving in together, so we could save a good chunk of living costs. I also had practically no other expenses at the time, so it didn’t take long for us to save up the amount I spent on the ring. Luckily, I was able to cover that amount without going into massive debt. That shortened the time it took to pay for the ring too.

However, as people get older, the amount that constitutes their salary for three months also goes up. You need to ask yourself when you are faced with a ring decision: Do you want to spend more on the engagement ring than on the whole wedding budget itself? Do you want to use your savings on jewelry or do you want to use it to live a higher quality of life? And if you truly need to finance the ring, you must realize that it’s going to cost quite a bit more by the time all the interest charges are figured in.

Decide For Yourself

Of course, what you spend on your engagement ring depends on what’s important to you. And what kind of ring you want. In my case, a friend of a friend ultimately hooked me up on diamonds bought at wholesale prices. I also had the opportunity to check prices internationally, because my parents were in Hong Kong at the time. Giving discounts off the standard price list was common practice there. After all, the better diamonds are all internationally certified based on their cut, color and carat (size) so you can easily compare prices from piece-to-piece.

I did have to then find a place to make the ring that the diamond is set on. That was easy, though, since most jewlery shops can do that. The prices are significantly less than getting it at retail, since you aren’t paying the markup on the diamond itself.

And speaking of retail markup, my research indicated that diamond engagement rings often come with a markup of anywhere between 600 and 800 percent. Yikes! Doing a little extra research and legwork yourself could save you a bundle.

What Do You Value?

On the other hand, you only get an engagement ring once (hopefully). It represents a memory that will last forever. For some people, it’s worth the extra money to buy something amazing. After all, a diamond is forever. (Another marketing slogan you shouldn’t fall for!)

You should think about how much the bride values a diamond ring. Would she be happier with a piece of jewelry everyone can see from a mile away? Or would she rather have you save that sum, so you can use it on your combined lifestyle when the two of you are living together? That $20,000 goes a long away towards a house down payment. Or re-doing a nursery for future children. Or simply sitting in a long-term investment, growing for your golden years.

What she values in the ring should also be considered. Is she expecting a huge rock? Is she expecting a smaller diamond that’s better in quality? Does she even want a diamond? Or are other types of jewels even better? Many couples have announced their engagement with rubies, sapphires, alexandrite, or moissanite.

The Bottom Line

Ultimately, you need to decide what’s important to you and your partner, and go from there. I don’t know much about or care about flashy jewelry. My wife wanted something decent but didn’t need bling that’s the best-of-the-best. That’s why it made sense to buy a good quality ring, but not something so over-the-top that even my distant relatives overseas will end up calling me about it.

For some, an expensive engagement is a must. It’s an important part of the whole experience. For others, it’s just some formality, that doesn’t make much sense at all. Before you spend any money on the ring, consider whether or not it’s really that important to you. If it’s not, then following some made up rule of thumb is just like throwing money down the toilet. If it is though, then seriously weigh the pros and cons of spending big money. Having that amount in your savings might be the better choice.

Wedding Ring Around Rolled Up $100 Dollar Bill


David Ning

Experienced Finance Writer

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs, where he discusses every day money issues to encourage the masses to think about their finances more often.

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