How Much Should You Spend on a Diamond Engagement Ring?

Something Old, Something New, Something Borrowed Making You Blue?

Where did that old adage about spending a month's salary for a diamond engagement ring come from? It's just an old marketing ploy. In an article for The Knot, Angela Guzman and Cristin Perry note that diamond marketers created this standard to drum up sales at the start of WWII. The standard eventually grew to two and then three month's salary. So, how much do people actually spend on engagement rings? Guzman and Perry cite a 2019 study by The Knot that found the average current cost in the United States was $5,900, but the spend per couple varied. A third of the respondents to the study spent between $1,000 and $3,000, and 10% spent less than $1,000.

According to a 2019 survey conduct by Morning Consult for the The New York Times/the Upshot, people who make between $23,000 and $90,000 a year spend between 3 and 4 percent of their annual salary on an engagement ring. That's more like two weeks' salary than two months'.

So, how much should you spend? There's really no right answer to that question. It depends on the kind of ring you want and what you feel comfortable spending. Just realize that you shouldn't borrow your way into debt over an engagement ring.

Tips and Tricks for Choosing Stones and Settings

Before you even begin shopping for a diamond engagement ring, consider the following points. This advice will help you create something spectacular.

Should I Buy Loose Stones or Whole Rings?

While you can buy a whole ring, with the diamond already in a setting, choosing each element separately allows you to customize and compare prices with different ring combinations. Start shopping by looking at loose stones. Once you've found a stone you like, look at different types of metals and settings until you find the arrangement that appeals the most to you. (In fact, according to The Knot's 2019 study, 45% of the respondents bought custom rings for their intended).

What are my Partner's Lifestyle and Tastes?

Your partner's lifestyle should inform your decision about what kind of ring to buy. For example, for those with careers or hobbies that are rough on their hands, choose a stone shape that won't chip easily. Pick a setting that will hold the stone firmly in place.

Despite what you might hear, not everyone wants a big diamond for their engagement ring. What does your partner prefer? Perhaps a certain metal color is more important than the stone size. Some people don't want diamonds at all. Don't worry, you have a myriad colored gemstones options, from traditional ring stones, like rubies, sapphires, and emeralds, to delicate pieces like pearls and opals, to less well-known treasures like garnets and tourmalines.

Finger Size Matters

Of course, you'll need to know your partner's ring size, but the size and shape of your partner's finger should also influence your decisions. For example, oval and pear-shaped ring stones can make a finger look longer and thinner. Too big a diamond may just look awkward on a petite finger. So, examine the hand you'll be taking in marriage very closely.

Set a Budget

Look at what you can spend realistically and compare it against the total costs for your dream ring. If your budget and the price of your ring match, great! If not, you can find ways to reduce the price without sacrificing the beauty of your diamond engagement ring.

The Four Cs of Diamond Grading

Before getting into how you can save money on a diamond, let's talk about what to look for in a diamond. 

You've probably heard of the Four Cs: carat, cut, clarity, and color. Let's review them before discussing how each affects your diamond's price.

Carat

A diamond's weight is measured in carats. (1 carat equals 0.20 grams). A one-carat diamond round has become a benchmark for an engagement ring stone. The one-carat weight is also a good place to start when you're shopping for fancy cuts like hearts, which look better in larger carat sizes because the details of the stone are easier to see.

Although you'll commonly see "carat" used describe a diamond's size, remember that the term refers to weight. However, heavier diamonds do tend to have a larger face-up surface area. The heavier the stone, the more expensive. In fact, carat plays the most significant role in determining the price of colorless diamonds. (But beware, some stones may be cut heavier to increase the price but aren't cut well-enough to actually look bigger or perform well).

Cut

A diamond's cut — how well it shines, sparkles, and shows flashes of color — is both the most important contributing factor to a stone's beauty as well as the most complex of the 4 Cs to analyze, especially for a non-expert.

The most widely used diamond cut grading system is the GIA system. It assigns diamonds one of five grades: Excellent, Very Good, Good, Fair, or Poor. Vendors like James Allen and Blue Nile don't sell any diamonds below a Good cut grade, but they also add their own trademarked cut at the high end. James Allen has True Hearts™, and Blue Nile has Astor Ideal. (What James Allen and Blue Nile refer to as Ideal Cuts are Excellent grade cuts).

Keep in mind that these grades apply only to standard round brilliant cuts. Gemology labs don't assign grades to fancy cuts, such as ovals, pears, cushions, and trillions. These types of cuts have their own grading criteria, which are much more subjective than those for rounds.

Fancy color diamonds (whether fancy cuts or rounds) have their cuts evaluated differently, too. These stones are cut to showcase their colors, not their light return.

Clarity

A diamond's clarity grade doesn't just describe its transparency. It also specifies the type, size, and number of imperfections on its surface as well as inside, such as tiny bits of minerals and even air bubbles that formed within the diamond itself. These are called inclusions. Larger, darker, and/or more numerous flaws will result in a lower clarity grade.

The GIA clarity grading system is the most widely used for diamonds. The grades range from "Flawless" (F), the highest grade, to "Included" (I), with several grades in between. Some grades even have numbered subdivisions. Higher numbers mean a higher grade.

To evaluate a diamond's clarity, gemologists magnify the stone to 10X to inspect it for imperfections. An F grade means there are no clarity imperfections visible under this magnification. In contrast, an I diamond will have many obvious flaws and inclusions visible under 10X magnification. (They will likely be visible to the naked eye, too). Generally, the higher the clarity grade, the higher the stone's price.

Both these brilliant-cut round diamonds weigh one carat and have E color and an Excellent cut. However, the F clarity stone costs $10,290. The VS2 clarity stone costs $5,340. VS2, "Very Small" inclusions, is a mid-range clarity grade. Can you tell the difference?

Color

All colorless or white diamonds receive a color grade. In the GIA diamond color grading system, stones that come closest to colorless get a D, the highest grade. Stones with slight yellow or brown tints receive letter grades that go further down the alphabet as they show more color, all the way to Z. For colorless diamonds, the less color in a stone, the higher the price.

Other diamond colors, such as pink and blue, are considered fancy colors and have their own grading system. Diamonds that show stronger yellow or brown colors than just "tints" are also considered fancy colored, such as fancy colored yellow diamonds.

Fancy colored diamonds are much rarer than colorless diamonds, so they typically cost much more than colorless stones with otherwise equal qualities.

Your Diamond Engagement Ring Stone Doesn't Need Perfect Grades

We've covered the basic rules of diamond grading and what makes one diamond cost more than another. Now, it's time to break those rules… or at least bend them a bit.

Your diamond doesn't need the highest grade in each of the Four Cs in order to be beautiful. Unless money is absolutely no object to you, you don't really want a stone with perfect scores. What matters most is that you and your partner love the diamond you select. Maybe you both like that diamond with a yellowish tint and low color grade, or find that a stone under one carat just looks better in the ring design you want.

You can get a gorgeous ring and still stay within your budget. Here are some tips on how you should — and shouldn't — try to save money on your diamond engagement ring.

Consider a Lab-Created Diamond

If you insist on a perfect diamond with perfect grades, you can still save money by shopping for lab-created diamonds. (This will help you save money regardless of the diamond grades you want). Lab-created or synthetic diamonds are real diamonds, not fake diamonds or simulants. They're just created in a lab instead of under the Earth. They have the same optical, physical, and chemical properties as mined diamonds. However, they typically cost 30% less than mined diamonds of the same qualities.

If you have concerns about ethical diamond sourcing, lab-created diamonds are not only conflict-free but also have a smaller environment impact than mined diamonds.

Play With Carat Weight

Diamond prices increase exponentially, rather than incrementally, as carat weight goes up. There are also certain benchmarks that trigger price increases. You'll see price-per-carat jumps at 0.90, 1.00, 1.50, 2.00, 3.00, 4.00, and 5 cts. These are known as the "magic numbers" of diamond pricing.

So, a diamond that weighs 0.05 cts has the same has the same price per carat as one that weighs 0.89 cts. A 0.90-ct diamond will have a higher price per carat, but it will be the same for all diamonds from 0.90 to 0.99 cts.

This means that, sometimes, going down just a few tenths — or even just hundredths — of a carat will get you a much better price on your diamond.

Both these round diamonds have D color, IF (Internally Flawless) clarity, and Excellent cuts. However, the 0.85-ct stone costs $5,870. The 1.00-ct stone costs $11,400.

Play With the Setting

You can make your center stone look bigger by choosing the right engagement ring setting. For example, adding small side stones or a halo of smaller stones can accentuate the size of the center diamond. (Of course, adding accent stones will increase the cost of your ring).

You can also make your center stone look bigger either with a high prongs, like a cathedral setting, or with a bezel setting.

There's a risk to this experimentation, however. If you're not careful, you could also make a diamond look smaller by adding side stones that are too large compared to the center stone. Some settings may also prove more expensive in the long run. For example, tension settings offer a striking combination of protection and brightness, but resizing and adjusting these rings will be more difficult. They can also make your diamond appear smaller in size.

If you're not sure about your choice of setting and side stones, consult with your jeweler.

Consider Another Shape Besides a Round

Although the round brilliant has become the standard for a diamond engagement ring stone, other shapes are growing in popularity. Fancy diamond cuts can create many kinds of shapes: elongated ovals, pears, and marquises, rectangular cushions and emerald cuts, and even triangles and hearts. If you widen your search to include fancy cuts, you'll have more options for unique looks for your ring and you'll probably save money, too.

Fancy cuts tend to cost less than rounds of equal carat weight and similar quality. Furthermore, most fancy cuts will look larger than rounds of the same carat weight. For example, a one-carat oval diamond has a larger face-up surface area than a one-carat round, since it has a larger table facet. The elegant marquise cut will also look 15% larger than a round of the same carat weight.

Don't choose a heart that weighs less than one carat. You may find it difficult to discern its heart shape. Since the outline is one of the main attractions of this cut, this is a significant drawback.

Go a Little Lower on Clarity

Keep in mind that trained professionals determine a diamond's clarity grade under 10X magnification. You're not likely to see as many flaws with the naked eye. This means you can buy a diamond engagement ring stone that will look great, even if you go as low as SI1, "Slightly Included."

Look for an Eye-Clean Stone

Basically, you want an eye-clean diamond. An eye-clean diamond looks flawless to the naked eye, even if it's not graded "Flawless." Of course, you'll need to examine a diamond under magnification — whether you're shopping in person or through an online vendor — so you can understand why the stone received its clarity grade. However, you also need to look at the stone from a normal viewing distance, face up, about 6 inches from your eyes. If you don't see any obvious flaws, you've got an eye-clean diamond, regardless of its actual clarity grade. You can find a beautiful eye-clean stone for far less money than a diamond with a Flawless clarity grade.

Some Settings and Cuts Can Hide Flaws

Some of the flaws that drive a stone's clarity grade down can actually be cleverly hidden by jewelers. Flaws located in some areas, like near a stone's girdle, can be covered by a bezel setting. An inclusion in one of the tips of a princess cut may be covered by a protective prong. Certain cuts, like hearts and rounds, show more brilliance. The reflections of light off their facets can also help hide flaws. 

Smaller Stones Hide Flaws Better Than Larger Stones

A one-carat diamond won't hide flaws as well as a smaller diamond. Likewise, two and three-carat stones may show flaws that a one-carat stone could hide. This is especially true if you choose a fancy cut diamond with a larger table facet than a round. Dark or numerous inclusions under a large table are more readily eye-visible.

If you examine fancy cut diamonds carefully before buying, you might still find an eye-clean SI1. However, if you opt for a clarity no lower than VS2, "Very Small" inclusions, a mid-range grade, you'll probably have an easier time finding an eye-clean fancy cut stone.

Go a Little Lower on Color

Diamond colors are also graded by experts under very particular conditions. They examine a white diamond's color by viewing the unmounted stone from the side, to minimize reflections. This means white diamonds are graded by their body color, rather than their face-up color, which is what you will actually see when the stone is set in your ring. (In contrast, fancy colored diamonds are graded by their face-up color).

Even though this round brilliant diamond has been mounted, when you view it from the side, you can still see why this "off-color" diamond received an M color grade. However, when you view the diamond normally, face up from the top, it looks much whiter. The rose gold setting also helps the stone look whiter. (Note the small diamonds hidden under the center stone in the peek-a-boo setting).

Color Grades Can be Difficult to Distinguish

Close and adjacent color grades for white diamonds are difficult to distinguish, even for experts. Try our Impossible Diamond Color Quiz and see for yourself. So, if you're looking at diamonds in the D to F color range, you should also check out G and H color stones. You could save a considerable amount of money by choosing a lower color grade.

Both these 1-ct round diamonds have IF clarity and Excellent cuts. One has D color and costs $13,600. The other has G color and costs $6,870. Can you guess which one is the D color stone?

Fancy Colors

Fancy color diamonds come in just about every color, even black. Reds, greens, and blues are among the rarest and most expensive diamonds of any kind. Most fancy color stones, except some browns, yellows, and blacks, will cost more than white diamonds of the same weight and quality. Some will cost quite a bit more.

Be aware that some diamonds receive fancy colors through a variety of treatments. For example, high pressure-high temperature (HPHT) treatments, radiation treatments, annealing, and coatings can create pink colors. Only HPHT color is permanent. Exposure to extreme heat — like that of a jeweler's torch — can alter the other treatments.

If disclosed properly, treated fancy color diamonds can save you a lot of money compared to stones with natural fancy colors. But, how do you feel about such treatments? Consumer opinion on the subject is divided.

Lab-created fancy color diamonds are another money-saving option. Again, you must decide if you'll be happy with a synthetic diamond.

Choose a Ring Metal That Makes Your Diamond Whiter

You can make a white diamond with a low color grade appear more colorless if you choose the appropriate ring metal. As you might expect, colorless (D through F) and near colorless grades (G through J) will look colorless in white gold or platinum. On the other hand. white gold will make the color in lower grade stones stand out more.

Yellow gold can be used for colorless stones. However, these will look best if they're held by white gold prongs. Near colorless as well as faint grades (K through M) will look colorless in yellow gold.

Colorless diamonds won't look right in rose gold, but near colorless as well as K color stones will look colorless. L and M grade stones may show more color in this metal.

The type of metal you choose will also affect your budget. Silver is inexpensive, but not very durable and rarely used in engagement rings. Yellow, white, or rose gold are more popular and more durable. Platinum is much more expensive but also more durable.

Be Aware That Fancy Cuts Show More Color

Fancy cuts tend to show more color than rounds, especially those with large tables, such as marquises, emeralds and asschers, and ovals. When considering ring metal options for these cuts, examine stones with color grades at the lower end of the ranges carefully. For example, a J color princess might not look colorless in white gold. Also, some shapes may concentrate colors at the ends of the stone. For example, a pear cut might look two-toned, with darker color at the tip. Staying above H color for fancies can help avoid this issue.

Watch the Color of Your Accent Stones

If you're using settings that place smaller side stones, halos, or pavé-set diamonds near the center diamond, make sure the center stone's color grade matches or exceeds that of the accents. Otherwise, the center stone will appear to show more color.

If the accents are spaced further away from the center stone, you have more flexibility with the colors. However, always check your center and accent colors with your jeweler to make sure they'll have a harmonious appearance in your ring.

Don't Skimp on the Cut

A diamond's cut is the one area where you shouldn't compromise. A well-cut diamond will dazzle viewers and compensate for low color and clarity grades.

The 1-ct Excellent cut round has G color and SI1 clarity and costs $4,500. The 1.02-ct Good cut round has D color and VVS1 clarity and costs $9,670. Although the Good cut round has superior color and clarity grades, it doesn't have the brilliance or sparkle of the Excellent cut round. With a little investment of your time, you can save some money by searching for Excellent cut diamonds with less than the highest color and clarity grades.

If you're shopping online, you can't really tell the difference between these cuts just from static pictures. It's important to turn the stone in direct light and look for brilliance (brightness), scintillation (sparkles), and dispersion (fire, or flashes of color). Both the James Allen and Blue Nile websites have videos of all their diamonds that allow you to view them as they rotate. (If you're shopping at a brick-and-mortar jeweler, ask to view the diamonds that interest you from all angles, too).

Special Considerations for Fancy Cut Diamonds

Since fancy cuts don't receive cut grades from gem labs, the cut grades that may accompany these stones are more subjective than those for rounds. You can't consult a lab report to confirm a fancy is well-cut. Thus, it's especially important to observe the stone in direct light from different angles to see if you like it.

All fancy cuts have some light leakage, dark areas that don't reflect light. (Rounds, on the other hand, are designed to maximize light return). However, some fancies display what's known as the bowtie effect, a dark area shaped like a formal bowtie. Oval, emerald, marquis, pear, and heart shapes can all have bowties across their middle. While some aficionados like the look of a bowtie across an oval, you'll have to decide for yourself whether or not you want any stone with a bowtie.

Should You Buy Ring Insurance?

According to The Knot's 2019 study, three out of four buyers purchased ring insurance. It's something to consider, given the money you might put into your purchase. If you're considering an expensive ring, factor it into your budget.

So, how much should you spend on a diamond engagement ring? That really depends on you. Rest assured, though, that whatever your budget, you can build a beautiful ring that you and your partner will love.