As the world’s economy is finally bouncing back from the pandemic, many couples are rushing to tie the knot with the love of their lives after months of delay and making compromises. The wedding boom is here and this year, we are seeing more couples revel in time-honoured wedding traditions than ever.
Luxury weddings are growing in popularity and couples are spending more money with longer guest lists, bigger hors d’oeuvres at receptions and wow-factor event destinations.
It’s easy to go overboard financially when it comes to getting married but one long-standing tradition many couples splurge a bit more is on engagement rings.
Engagement rings are like physical reminders of a special moment and a lifelong promise of eternal love. Imagine your significant other staring at their fourth finger from time to time and smiling softly because they’ve just remembered the day you asked them to spend the rest of your lives together.
The pressure for men to look for and pull off a perfect engagement ring can be overwhelming. But the cost can be incredibly surprising too. Not surprisingly, however, getting married can really change your finances forever so it’s practical to nail down the price estimates of an engagement ring before you go shopping.
So if you are wondering how much you should spend on this very special gift, you’ll get plenty of insights from this article. We also list down some budgeting tips so you’d still have extra $$ to spend for your honeymoon in Tasmania or Whitsunday.
What is the average cost?
According to a 2020 Australian wedding industry report, the average amount spent on an engagement ring is $5,367 — which is only a slight increase from the $5297.50 in 2019.
For this price, you can buy a high-quality 1.00 -carat total diamond weight or an utterly classic 0.50 ct solitaire engagement ring your fiancé-to-be will absolutely love.
Obviously, diamonds with exceptional carat weight can differ dramatically in price. A 2-carat diamond, for example, can range anywhere from $19000 to a whopping $150000 AUD.
Given this average price point, some to-be-weds spend a lot less and others spend a whole lot more. It’s basically up to you! You’ve just got to strike a balance between what she likes and what you can afford.
How much do most couples spend on an engagement ring?
Every couple’s financial circumstances are unique. Moreover, there is a wide diversity of spending when it comes to engagement rings so it is difficult to give accurate data and statistics.
Research, however, suggests that there is a reliable relationship between annual income and ring cost.
According to a recent survey, couples with a household income of $67,000 spend $5,800, household income of $92,000 spend $9,300 and household income of $177,000 spend $15,600 on an engagement ring.
Of course, deciding how much you are going to spend should not be based on how much other people spend. There is no rule to break if you are going to allot less or more money for an engagement ring than most people would.
Practically, you may also consider consulting with your partner. An engagement ring survey in Australia found that 1 out of 5 couples buy their ring together. This means you get to discuss the budget together. It is an investment you can make as a couple, anyway.
Ditching the “three-month” rule
We just mentioned that there is no rule to break on how much you spend for an engagement ring but you may wonder, “what about the three-month salary rule?”
Long story short, the three-month rule suggests would-be grooms should spend between one to three months equivalent to their salary to buy an engagement ring. It started as a marketing strategy from a well-established diamond company called De Beers.
As most men don’t buy jewellery regularly, they were seeking advice so the company made it a rule of thumb. It is also worth considering that at the time 3 months wages and the cost of living and debt to income ratios were significantly less than they are in 2022.
In a survey, 20% of people think the rule is to spend one month’s salary while 70% think it’s three months’ worth.
The three-month rule has been perpetuated through the years but over time, more and more couples are starting to become more informed and intentional about their choices particularly when it comes to getting married.
The whole process of the wedding should be about you and your partner. Rather than following any rule and tradition in buying an engagement ring, make decisions according to your needs, sources and preferences.
Why do engagement rings cost the way they do?
There are several factors that affect an engagement ring’s cost. One is the attributes of the diamond.
You may have heard of the four Cs of diamonds which are composed of the cut, colour, clarity and carat. Interestingly, a larger diamond can cost the same as a smaller one because of, let’s say, its colour or cut.
The best way to think about these elements is to think of an excel spreadsheet with multiple tabs down the bottom. Each cell on the page is a $ value. When you click on eg $10,000 on the colour tab, what options appear on the carat and clarity tab? In certain cultures clarity is the most important factor – the belief that the more pure a diamond internally the more luck the marriage will have. Here in Australia we tend to like a cross section of good colour, clarity and carat, while making sure the cut is the best it can be to insure the brightest sparkle.
The round-cut diamond, for example, is very expensive schematically because it consists of 57 to 58 facets that accumulate the tiniest rays of light and creates the most sparkle and brilliance.
Fancy diamond cuts like Cushion, Princess, and Marquise Cuts are the least expensive diamond shapes for engagement rings. This is due to the volume of rough stone retained with only 20% lost during the cutting and polishing process.
On one hand, the colour grade of the diamond can be difficult to tell from the other. You have to compare them side by side. Take note that the colourless is the rarest and is, therefore, the most expensive. You may want to opt for yellow as it is the least rare and more budget-friendly.
A diamond’s carat weight, of course, can heavily stretch its price so if you want to spend less fortune, go for a diamond with a carat weight just under the benchmark. A 0.9-carat diamond doesn’t appear much different from a 1.0-carat. You may not even notice it at all and their difference in weight is unlikely to be visible to the naked eye. But the price can be far less.
Other factors that influence the cost of an engagement ring also include the following:
- cost of the ring metal
- additional gemstones
- quality of the make
How do I cut engagement ring costs without compromising too much?
So you are marrying the love of your life and want to treat her with the ring of her dreams. If you are working on a budget, you don’t have to completely hold back.
As certain settings can be expensive, focus the bulk of your budget on the ring’s diamond and consider the elegant and timeless solitaire setting. They are less costly and perfect for showing off a gorgeous centre stone.
You can also minimize the cost by manipulating the 4Cs. For example, a good cut will result in a better sparkle, thus, making it look more pricey. Pitch on for lower colour and clarity with an excellent cut and it will make up for it.
Three-stone rings can also make a classic statement but they significantly increase the price of the setting.
Reducing your financial risk
Buying an engagement ring is most likely the first biggest financial decision a couple makes together.
And many are trying to protect this investment.
In fact, 47% of couples are now taking out insurance for the engagement ring in case something happens to it. Barely surprised, insurances are more common the more the engagement ring is worth. Always contact your current home contents insurance provider, and take a look at jewelsure.com.au and qreport.com.au – two insurance companies that only insure Jewellery and watches, provide international coverage and choice of repairer or Jeweller, and generally a whole lot cheaper. Both work directly with the Jeweller to get first hand information – saving time and money.
On top of that, you have to understand how much is enough to spend on your engagement ring. Have an informed decision by knowing your current financial situation and spending only whatever you are comfortable with.
Stretching yourself way too much for this purchase can hurt your finances so it is always safe to be equipped with the right knowledge.
At Anania Family Jewellery, we pride ourselves on high-quality engagement rings — crafted in the finest way to express your unique love story while giving you the best value for your specification and budget.
For more information and tips on engagement rings, read more from our blog posts.