When making the decision to purchase jewelry, especially that first major purchase just before an engagement to be married, there are several things to consider so that this first major decision during the marriage period starts on the right foot. Making the right financial choices at the very beginning of a marriage is a measurement of how you will likely approach the (financial side) side of your marriage as well. Establishing a good financial foundation at the beginning is critical for a strong and long-lasting marriage.
It is never a good idea
to go in debt to purchase an engagement ring. The average cost of a diamond engagement ring is $3,500 to $4,000. That does not have to be the case. If you have read our article on the history of diamonds, you will see that the price of diamonds has been manipulated (by supply and demand) by one organization. Diamonds are not rare, but we have all grown up believing they are, and you need to spend two months salary for the bride-to-be. We hope to illustrate in the following pages how, by using credit instead of cash, you can spend an exorbiant amount of money, and waste away your financial security, right from the the first financial decision - the engagement ring.
When selecting a mined diamond, the price means little unless you understand the four factors that determine the quality and price of a diamond, known as the four Cs: color, cut, clarity, and carat size. Generally speaking you can expect to pay the following (it varies greatly depending on the four variables above):
- $125 to $500 for 1/4 carat or less, set in 10 to 14 carat gold
- $500 to $750 for a slightly larger stone
- $750 to $1,000 for diamonds between .3 and .5 carats, some with a platinum or 18 carat gold
- $1,000 to $2,000 for high quality diamonds between .30 and .57 carats or mid to high quality diamonds up to .75 carats
- $2,000 to $3,500 for diamonds from .4 to 1 carat in 14 or 18 carat gold
- $3,500 to $5,000 for quality 1 carat stones in 18 carat or platinum settings
- $5,000 to $7,000 for quality 2 carat stones in 18 carat or 24 carat settings
On the other hand, for a simulated diamond, the price difference
between a 1/4 carat & 2 carats will be less than $200.
Credit Card Purchase
By purchasing a ring on a credit card, the following table illustrates how much interest you could
pay, if you made the minimum payment of 2% while you were paying it off. The average APR for credit cards right now is 15%
| Simulated Diamond
|| 1/2 Carat Diamond
|| 1 Carat Diamond
|| 2 Carat Diamond
|Average Cost - $400
||Average Cost - $1500
||Average Cost - $3000
||Average Cost - $7000
|Payoff Time* - 33 months
||Payoff Time* - 172 months
||Payoff Time* - 264 months
||Payoff Time* - 376 months
|Total Payoff Amount - $489
||Total Payoff Amount - $3,184
||Total Payoff Amount - $7,184
||Total Payoff Amount - $17,851
You can make your own calculations on payoff amount and time using this calculator from BankRate
. On the next slide, we will show the calculations on the flip side (of this decision) of using a credit card.
We used the figures from the previous slide in the calculation of compound interest. If you were purchase a simulated diamond instead of a minded diamond, AND THEN used what you were paying per month in credit card payments and put it into your mutual fund (at 12% interest bearing), the following will demonstrate how much you could save over the same payoff period.
| Simulated Diamond ($400)
|| 1/2 Carat Diamond ($1500)
|| 1 Carat Diamond ($3000)
|| 2 Carat Diamond ($7000)
|Time to Payoff (Credit Card)
|Compound Interest Earned
As stated in the beginning slide, it is not recommended going into debt to purchase any jewelry. By buying a simulated diamond, you can get a truly amazing ring, with a phenominal setting. If you want to make this a starter ring (like a starter house), you can easily upgrade later with a mined diamond. The settings we have are just as good as 90% of the other jewelers nationwide. They are made from the finest metals and with the best manufacturing methods which will ensure that it endures as long or longer than your relationship.
Best wishes in your shopping experience!