The Controversial Guide to Salary-Based Ring Budgets

Many of us are familiar with the old-school rule that suggests men should spend three months’ salary on an engagement ring. But where does this societal pressure to spend come from? And how can we take a smarter approach to saving for our significant other’s big purchase? We spoke to experts for some insight.

Set a Budget

If you’re thinking about proposing, you probably have some ring-related questions on your mind. One of the most common concerns is how much to spend on the ring. The old rule of two months’ salary has been around for a while, but it isn’t necessarily a hard and fast rule that you must follow.

The rule originated from a marketing campaign by diamond giant De Beers, who wanted to equate the size of a diamond with your love and commitment. Over time, this guideline became ingrained in our societal expectations and led to an expectation of engagement ring cost that could be out of reach for many couples.

A better approach is to figure out your financial situation, which will help determine a budget that makes sense for you and your partner. To do so, add up all of your monthly income sources and subtract your expenses. Once you have an idea of your budget, you can start searching for the perfect ring.

In addition to your current income and expenses, it’s important to consider your future financial goals as a couple. Do you want to save for a home, have children in the future or make other large investments? These should all play a role in your engagement ring budget.

Finally, don’t forget to factor in any other financial considerations that may impact your budget, such as existing debt and lifestyle choices. If you are unable to afford a ring now, be sure to find an affordable option that allows you the opportunity for upgrades down the road. If you’re able to purchase an upgrade at a later date, you won’t be starting your marriage with financial stress weighing on you from the get-go.

Create a Savings Account

It’s common to hear the old advice that you should spend two or three months’ salary on an engagement ring. However, this guideline is outdated and doesn’t take into account the fact that everyone has unique financial situations. For example, someone who makes $60,000 a year may have more debt and living expenses than another person making the same amount.

A better option is to save a percentage of your monthly income, which will be easier to track than a flat figure. Using budgeting tools, such as EveryDollar, you can set up automatic transfers to a separate savings account. This way, the funds are automatically earmarked and you won’t have to think about them as much. Depending on your timeline, you may also want to consider a high-yield savings account (HYSA), which can help you maximize your earnings.

Another important step is to look for ways to cut non-essential spending, such as subscriptions or luxuries. This can free up more money to put toward a ring. If you’re able to make these changes without increasing your overall income, it should be easy enough to reach your goal. Alternatively, you could use unexpected windfalls, such as bonuses or tax returns, to supplement your savings.

Create a Savings Goal

If you’re following the traditional guidelines, your engagement ring budget should be around two to three months of salary. This figure should align with your financial situation and your partner’s preferences. However, there are plenty of other things you’ll need to pay for. Make sure you have a solid emergency savings plan in place, and don’t forget to factor in your monthly loan or credit card payments. To get a realistic idea of how much you should be saving each month, start by determining which expenses are essential and non-essential. Using your spending data, you can determine which categories need to be cut back while still allowing for fun activities and the occasional treat.

Once you know which categories you can trim, set a realistic goal to save that amount each month. You may need to take on a side hustle or find ways to reduce your daily spending to achieve that goal. For example, instead of buying a new outfit at the mall, consider shopping thrift stores for a bargain. Alternatively, cook dinner at home and use public transportation to lower your daily spend.

Alternatively, if you’re comfortable with doing so, you can also save toward your ring by selling any high-value items you no longer need. This is a great way to apply Marie Kondo’s philosophy of letting go of items that don’t “spark joy.” Using app-based marketplaces like Craigslist and Facebook Marketplace or selling through sites like Poshmark can be an effective strategy for expediting your savings goals.

If you’re really serious about meeting your savings goals, you can even move back in with your parents to minimize expenses. Regardless of how you achieve your savings goals, remember that any savings is better than nothing.

Create a Spending Plan

Ultimately, you must determine what is an appropriate ring budget for your financial situation. This requires looking at your current financial situation and evaluating the needs versus wants of both you and your partner. A salary-based metric is not ideal as it doesn’t take into account debt and other financial obligations. Moreover, it does not factor in the cost of living and other expenses which are unique to each person or region. The three months’ salary rule may also be impractical for some people, particularly in cultures where the ring is just one component of wider lobola (bride price) customs.
Rather than relying on the outdated two months’ salary rule (which was invented by diamond company De Beers for marketing purposes), NerdWallet recommends using a spending plan to create an engagement ring budget that fits your unique situation. The first step is to calculate your monthly discretionary income, including automatic deductions for 401(k), savings, and health and life insurance. Then subtract any expenses you have to pay on a regular basis, such as rent, utilities and loan or credit card payments.
When creating your spending plan, it’s also important to consider your other financial goals and priorities. For example, if you’re planning a Wedding on a budget, you may need to allocate more funds towards the wedding expenses and choose a more modest engagement ring. Alternatively, if you’re saving for a down payment on a house or have significant student loan debt, you may need to adjust your ring budget accordingly. By taking a holistic view of your finances and priorities, you can create a spending plan that allows you to purchase a meaningful engagement ring without compromising your other financial goals.