How to Afford an Engagement Ring?
An engagement ring is a major, life-changing purchase. According to The Knot‘s 2023 Jewelry and Engagement Study, the average cost of an engagement ring in the United States is currently $5,500. While it should be noted that not everyone spends the same amount, this average number shows that Americans tend to spend a good amount on their engagement rings.
Engagement rings are often one of the couple's biggest purchases, which begs the question: how do people afford engagement rings? Ideally, a couple would save up and buy their wedding rings with cash. However, that’s not feasible for every couple. Since engagement rings come with hefty price tags, many couples turn to other options depending on what makes sense for them. The four most common ways people pay for engagement rings are cash, engagement ring financing options, personal loans, and credit cards. Each option has merits and risks, so we will help weigh the pros and cons.
How to Pay For an Engagement Ring
There are many ways to finance an engagement ring. Whether you decide to pay outright in cash or defer payments using loans, credit cards, or jeweler financing options, you deserve to have all the information available to make the best decision for you and your financial situation.
Cash
Most financial experts would say that if you can pay for your engagement ring in cash upfront, you probably should. If you pay for your engagement ring in full right away, you won't have to pay interest like you would with some financing options. This means that paying cash upfront can help you save money on your engagement ring.
Of course, not everyone has the cash for this major purchase just lying around. Most people have to save up before buying an engagement ring outright. If that's the case for you, you should see how much you'll need to spend to get the engagement ring you want, then make a savings plan that will help you hit that amount within a feasible time frame. For example, say you want to buy a ring that will cost $6,000 (including tax), and you also want to propose a little over a year from now. If you save $500 a month for 12 months, you'll hit your savings account goal within your desired time frame.
While paying cash for your engagement ring can help you avoid paying more in fees or interest, saving up enough cash for a piece of fine jewelry can take a long time. And, for many people, having to delay their engagement to save up for a ring is a serious, deal-breaking con. If you need to save for a ring, other options can certainly be faster than cash, so you may want to explore these other options if speed is important to you.
Engagement Ring Financing Options
Financing programs can be an excellent option for someone who wants to propose soon but find paying in a large, upfront sum to be unattainable. A financing program can help you get your ring now but pay for it in manageable monthly increments, often with no down payment required based on certain terms and conditions.
Many jewelry stores have financing programs that are specifically designed to easily give their customers more purchasing power. At Frank Jewelers, our financing program has a simple application process, low minimum monthly payments, special financing available (including no interest, same as cash terms available with credit approval), and an online financing partnership with Affirm. Affirm allows us to offer simple financing with no hidden fees and no money down for those who qualify, making it a great tool for those in need.
However, note that not all financing programs are created equally. One jewelry store’s financing program may have very different terms from another’s, so you need to research and read the fine print before entering any financing program. Even different offers within the same financing program can have different terms, so you need to look carefully at your specific personal finance offer, not just the program terms in general.
Put simply, financing programs can be a great option, but it is always important to review the terms and make sure that it is something you can afford. All information should be clear and easy to understand, including your interest rate under any promotions, your interest rate if a promotion expires before you finish your payment plan, and what happens if you miss a payment. Jewelry store financing can vary widely, so it's crucial to compare different offers.
Credit Cards with Monthly Payments
Using a credit card to buy an engagement ring is very common, and it's not hard to see why. If you already have a credit card, it's extremely easy to just put the cost of your engagement ring on your card and make credit card payments like you normally would. However, consumers should know that using a credit card to buy a piece of jewelry can be much more expensive than other options.
Credit cards generally have high interest rates and allow cardholders to make relatively small payments on their balance. This means that a cardholder who only makes their minimum payment will end up paying high amounts of interest. The interest on a big purchase can add up dramatically over time.
In some cases, using a credit card could be the best option for someone. Perhaps you have a new credit card with a “0% interest for 12 months” deal, and you can easily pay off your balance before the promotional period ends. If your card gives rewards like cash back or travel points for spending on the card, a big purchase, such as an engagement ring, can really push you forward toward your wedding or honeymoon funds. Using a personal credit card to pay for an engagement ring is usually not ideal, but it may be the right option, depending on your unique circumstances.
Personal Loans
Personal loans can be a practical option for financing an engagement ring, especially if you need flexibility. These loans are generally available through banks, credit unions, and online lenders. Unlike store financing, personal loans typically offer a fixed interest rate and set repayment schedule, which can help you budget effectively. You can shop around for the best interest rates and terms by talking to different lenders, allowing you to choose a loan that fits your financial situation.
However, it's crucial to understand the terms of any personal loan before committing. Ensure you compare rates from multiple lenders to secure the most favorable deal. Be aware of any origination fees and the total cost of the loan over time. While personal loans can spread the cost over several years, paying off the loan promptly will minimize interest payments and reduce the overall expense. Another advantage of using a personal loan is the potential for lower interest rates compared to credit cards, particularly if you have a strong credit history. This can make personal loans a more cost-effective option in the long run.
How Much Should You Spend on an Engagement Ring?
There is no certain amount you “need” to spend on your engagement ring, despite what you may have heard. Old adages say that the “rule of thumb” for engagement ring budgeting is to plan to spend the equivalent of two months’ salary on your ring. In truth, however, you should spend an amount that works for your unique financial situation.
When you set your engagement ring budget, you shouldn’t feel like you need to follow arbitrary rules or that you have to spend the same amount as other people. The cost of the ring is not more important than the reason you’re buying it: to propose to the love of your life. Buying an engagement ring is the first step in starting your lives together as a married couple. Getting into unmanageable debt is not a great way to start a marriage, so don’t bite off more than you can chew when picking out your ring. If you want to start your marriage off on the right foot, it’s better to stick to a comfortable price range for your engagement ring and avoid hurting your soon-to-be-joined financial health. Also, remember that you can always upgrade your ring down the line, so there’s no need to feel stressed if you can’t get an expensive, high-carat diamond ring immediately.
If you need to stick to a smaller budget when you go ring shopping, know that there are plenty of beautiful ring styles that can help maximize what you get for your dollar. For example, if you don’t have your heart set on a diamond engagement ring, choosing a gemstone for your center stone can help your budget stretch much further. Many gorgeous gemstones will stun at the center of an engagement ring while costing a mere fraction of what a diamond would per carat. Another option that can help you get more glamor for less is a ring with a diamond halo setting. The small diamonds on a halo setting are cost-effective since they can make a diamond center stone look larger and more brilliant for a small price compared to upping the size of your center stone.
If you need more ideas on maximizing your engagement ring budget through your choice of ring, don’t hesitate to contact us at Frank Jewelers. Our expert jewelers will happily help you find the perfect engagement ring for your tastes and budget. Additionally, we offer custom designing to create a beautiful, one-of-a-kind engagement ring that fits your ideas and financial situation.
Final Thoughts: How Should You Pay For An Engagement Ring?
While most financial experts agree that paying for an engagement ring in cash is the ideal option, it isn't always possible. Store financing, credit cards with monthly payments, and personal loans are all viable financing options that can help take the burden off the upfront costs.
Ultimately, only you can decide how to pay for your engagement ring or wedding band. So, consider your financial situation and the pros and cons of your payment options carefully. Whether you use jewelry store financing, a personal loan, or another method, make the choice that’s right for you and your future.