Common sense dictates that the amount you spend on a diamond ring will depend on:
- how much cash you can spare without getting into enormous debt,
- how much you love your future wife,
- whether or not you consider a diamond ring an investment.
Let’s discuss each of these factors to help you weigh the pros and cons of spending $1,000 or $18,000 on that diamond.
Factor #1: How much cash can you spare without incurring debt?
When shopping for a diamond ring, remember that it’s not the only expense you’ll need to worry about. Buying a diamond ring is just the beginning of a string of expenses that will follow once you pop the question. Of course, we’re not counting the many dinners, movies, picnics, surprise gifts, and birthday, Christmas, and New Year’s celebrations you’ve already spent on your sweetheart before THE question.
We’re only considering the costs for the engagement, wedding, and honeymoon going forward. Word has it that an average wedding in North America with 150 guests and a reception in a hotel can cost anywhere from $25,000 and up. If you’re planning a real grand wedding with a live orchestra, fancy favors, ornate invitations, an Eiffel Tower wedding cake, and vintage champagne, that modest $25K could easily triple.
So, if you decide to purchase a diamond ring that costs $5,000 or $10,000, what will your cash flow look like by the time the wedding is over and you’re back from the honeymoon? If you plan to start a family right after that idyllic trip, you’ll need a house—or at least pay rent while house-hunting.
Your credit card company has likely upped your spending limit so you can really splurge on this exciting chapter of your life. But do you honestly think getting into debt right before settling down is wise? Won’t that set a precedent? A tiny voice inside you may be saying, “Heck, I’m in debt anyway; why not buy a house with a pool and stretch that debt further?”
Perhaps it’s time to watch Oprah’s personal bankruptcy series. Some of the couples who confess to their overspending will tear your heart out.
Before you pay the jeweler for that diamond ring, just keep reminding yourself: this will add to my debt if I’m paying for it with a credit card.
As we mentioned, it’s just the beginning of a long string of expenses…
Factor #2: How much you love your future wife
Oh sure, love is a many-splendored thing, but love is also blind. Unless you stipulate in the pre-nuptial agreement that you get your diamond ring back in case of divorce, that ring will belong to her 100% once you slip it onto her finger. That’s one.
Two, if you’ve been a cheap date during the getting-to-know-you stage, and your idea of a fun date was taking her to the early bird special at a Chinese restaurant, then she deserves only the best diamond ring as a gesture of your love—and to compensate for the times you didn’t splurge on her. If there’s anything a woman can sense a mile away, it’s a cheapskate.
We’ll repeat: if you love her unconditionally and you believe you’ve found your soulmate, then open up your wallet and buy her a beautiful diamond ring that will bring tears to her eyes, pledge undivided loyalty to you, raise your children, do your shirts, make home-cooked meals like your mother used to make, and drop you off and pick you up at the airport.
Back to the question: how much should you spend on a diamond ring? A $5,000-$10,000 ring should “cut” it.
That much she deserves.
You love your future wife—that’s settled. Now let’s talk about how the diamond ring might serve as your personal statement. First, you want to express your love in quantifiable terms. That’s fine. Second, you’re buying an expensive diamond ring because you know there’s a sense of pleasure in giving, and you want to experience the joy of seeing her wear it 365 days a year. The oohs and aahs from her friends and family will be music to your ears. They’ll see you as a generous and respectable gentleman who places high value on his future partner. After all, love is a rare and priceless commodity.
Third, you want the ring to remind her of your love and commitment, because you’ll probably forget to say ‘I love you’ when life gets hectic, and you’re away on business most of the time. When that sparkle catches her eye, she’ll think of you. The ring will serve as the symbol of your life together.
We remember an anonymous saying about love and diamonds being like a poker game: “Love, like a poker game, starts with a pair; with her getting a flush, him showing a diamond, and both ending up together with a full house.”
Factor #3: Whether or not you consider a diamond ring an investment
Very few commodities these days appreciate in value. Your BMW, iPod, VCR, GPS, and skis all depreciate when used. It seems only a house and a diamond ring don’t lose value—unless both are neglected over time, or the housing and jewelry markets experience a crash.
Still, jewelry is considered a sound investment by many. The idea, however, is to obtain good value at the time of purchase. To determine if the ring is of good value, you’ll need to have it appraised. Your insurer will also provide clues about whether you paid a fair price, as the insurance premium will likely be steep. Certified and accredited jewelers are also a good bet. Gather as much information as you can.
Guard yourself against unrealistic expectations, though. Don’t buy a diamond ring thinking it will double or triple in value in a few years like a blue-chip stock. The only time that might happen is if you purchase a famous diamond collection (like the one Burton gave to Taylor), and the previous owners were as star-studded as the stones they wore.
We’re not sure if your banker will accept the diamond ring as collateral for an exceptionally large loan. And when you max out your credit cards, we doubt the credit card companies will take the diamond and write off your debt. What they’ll probably do is ask you to sell the ring first and then use the proceeds to pay any outstanding balance.
Sky’s the limit if…
You’re an independently wealthy entrepreneur with stocks, bonds, and a private jet. You own castles in Europe but don’t stay there long because you jet-set to Monaco and gamble away your money without flinching when you lose—or fly to Macau now and then to wheel and deal. You have a fund that will last you seven lifetimes, plus provide for your great-grandchildren many times over. You’ve got the Midas touch; everything you touch turns to gold. You’re money-smart, investment-savvy, and even Isaac Newton would envy your brains. Money is coming in every day, and you don’t even know why. You’ve lost track of receivables because they’re flooding in.
Is that your profile? If so, the question of how much to spend on a diamond shouldn’t be an agonizing one for you. We’ll simply recommend that you spend as much as your ego will allow!
She’s one lucky gal…
