Ring season raises question: How much to spend?
More than 500,000 men will pop the question this summer, and that means they will be buying engagement rings.
Many of them wondering how much to pay for the ring may recall the clever marketing campaign created decades ago by the DeBeers diamond company, which suggested a groom to be should spend at least three months of his salary.
But how valid is that age-old standard in a modern world, especially as many people are still suffering from a sluggish economy?
"In this economy, I'm waiting to see if the jewelry ads update the standard to three months' worth of unemployment benefits," said Richard Barrington, a personal finance expert for MoneyRates.com.
At a time when the unemployment rate is close to double digits and the household savings rate is in single digits, not everyone will feel comfortable spending 25 percent of their annual income on a ring.
However, as Calla Gold of Calla Gold Jewelers in Santa Barbara, Calif., puts it, one of the most important factors that goes into an engagement ring purchase is the man's economic status.
"If he is a lawyer or banker or someone in the white-collar world who makes a good living, if he buys a half-carat diamond for his fiancee, it signals that he is a cheap person," she said. "The engagement ring is a symbol to the rest of the world not only that you love the woman, but also that the man is economically successful."
According to the National Center for Health Statistics, there were 2 million marriages in 2009 with 646,000 occurring from June to August. Conde Nast, a worldwide publishing company, estimates that 26 percent of engagements happen during the June to August time frame, yielding about 540,000 engagements during the summer.
As the engagement and wedding ring buyer for Henne Jewelers in Shadyside, Nancy Luckett has had many customers come to her asking how much they should spend.
"I tell them three months' salary is not a set rule," she said. "Frankly, that's mostly marketing. The biggest thing is to look at what they can comfortably spend based on their financial situation."
While many people are familiar with the three-month rule, no one seems clear on whether it refers to three months gross or net salary.
Sadly, at times when marriage plans fail to materialize, the engagement ring becomes the subject of a legal dispute between the person who bought the ring and the one who wears it.
The engagement ring is considered a conditional gift that is tied to the promise of a wedding and courts have often ruled in favor of the man receiving the ring back if wedding plans are canceled. In some cases men have been forced to relinquish ownership if they either called off the wedding or caused the wedding not to take place.
Also, if the engagement ring is presented to a fiancee on a special occasion such as Christmas, Valentine's Day or her birthday, it could legally be interpreted as a gift that need not be returned if the engagement is broken.
While a tremendous amount of money is spent on marketing diamond engagement rings, reality can very often be quite different.
Although Tara Rose said the average customer at her Miami-based jewelry shop, Ring Finger Studio, spends between $7,500 and $15,000 on an engagement ring, she said buyers could often get more bang for their buck buying a half-carat center diamond circled with tiny diamonds, which makes the small diamond appear bigger.
"An engagement ring should be a sizable purchase, but you must be reasonable about it," Ms. Rose said. "Couples should take into consideration other financial goals they have such as buying a house or replacing a car on its last leg.
"Some jewelry marketing campaigns would have you think that you don't love your mate as much as the man who spends more on the engagement ring. Particularly in this economy, you have to make a reasonable purchase."
John Baird, communications director for Blue Nile, one of the largest online retailers of diamonds and fine jewelry, said the average diamond engagement ring is roughly 0.6 or 0.7 carats. The solitaire is still the No. 1 seller when it comes to engagement rings. It is a simple, but elegant single diamond.
Two to three months of the man's salary is what Richard Resnik said he advises couples to spend on the ring, but he also recognizes that times are tough. So, he cautions them against spending outside their means.
"Only they know what their financial situation is," he said. "The man shouldn't be cheap if he can really afford it. But he shouldn't be held to a standard that's inappropriate for his financial condition.
"Personally, I don't think an engagement ring should break the bank. The main focus is what the ring is about.
"It's a symbol of two people committing their lives together. If you need to scale back, you should. The symbolic meaning behind it is what's important."
First Published June 29, 2011 12:00 am