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“How much should I spend on an engagement ring?”

People don’t buy diamond engagement rings every day, so most of us aren’t familiar with average costs, pricing nuances and indicators of diamond quality. So if you’ve felt a bit lost, you’re not alone.

As for how much you should spend, there’s not a one-size-fits-all answer. The old adage of “one months’ salary” (or was it two or three?) doesn’t seem to match up to the current figures in Australia, and there’s no definitive source of truth to go by. However, having a budget in mind helps in many ways. It gives you parameters when you walk into a dazzling jewellery shop filled with more choices than you thought existed. And it provides you with confidence that you’re in control of the situation.

But what factors should you consider when setting your budget? And how much are other people spending on their engagement rings?

This article looks into what Australians are currently paying for their engagement rings, what global trends can tell us, what you should look for in a quality diamond, and how you can find the best piece for your budget.

 

Average Engagement Ring Cost in Australia

According to a DiamondPort survey, the average amount spent on an engagement ring in 2019 was $5,297.50. This is an increase from $2,579.65 10 years ago. However, Nicola Cerrone of Q Certified Jeweller, Cerrone Jewellers, says their average order value is higher.

“Social media has put significant pressure on what is expected from a ring and is pushing people to spend a bit more than they would have a few years ago,” she says.

High profile proposals and celebrity engagement rings don’t give us much of a realistic yardstick either. Miranda Kerr’s four-carat stone is rumoured to have cost just shy of $200,000, which is a shadow of Kim Kardashian’s $9.9 million monster. 

If we’re to go by the “three months’ salary rule”, we can see that the numbers don’t quite add up to $5,297.50:

  • Median annual income in Australia: $65,500 (before tax and superannuation)
  • Annual take-home salary after tax and super: $51,580
  • Monthly salary: $4,298
  • 3 months salary: $12,895 

The truth is, it’s hard to know what the average Australian spends on their ring. Our best guess would be somewhere between $5,000 and $15,000 for the majority of the population. Then, of course, there’ll be outliers like the $100,000 treasure and the simple $1,000 gesture, but the $5,000 - $15,000 ballpark is realistic for most of us.

 

What Does the World Spend on Engagement Rings?

How does Australia compare with the rest of the world when it comes to their jewellery spending? A comprehensive 2020 study of US consumers by The Knot, the ‘Real Weddings Study’, found that American jewellery shoppers spend an average of $5,500 USD on diamond rings, down from $5,900 in 2019.

However, the study found vast differences in average cost between US states, with Californians spending $10,241 on rings, $7,000 more than their Utah counterparts. Keep in mind that these figures are in USD. 

 

Average Engagement Ring Cost by Australian State

Not only do engagement ring prices vary from country to country, but they also run the gamut from state to state, right here in Australia. In the following table, you’ll see the average prices of an 18ct white gold solitaire with a weight of 4.70 grams. 

State

Round Diamond Solitaire

Oval Diamond Solitaire

NSW

$12,622

$10,044

QLD

$13,434

$10,036

SA

$13,898

$10,105

VIC

$12,299

$9,717

WA

$13,586

$10,501


As you can see, oval diamond solitaires cost less than their round counterparts, even for the same weight and precious metal. Why? Let’s explore.

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Diamond Shapes and Pricing

The diamond’s shape is a critical consideration because it directly influences price. For example, the most popular diamond shape, round brilliants, tends to cost more than other shapes (fancy shapes) due to market demand, increased manufacturing costs, and their unmatched brilliance.

Market Demand

A perennial favourite, the brilliant round diamond never goes out of style. Regardless of current trends, it always seems on point with whatever precious metal or setting style fits the zeitgeist. And high demand leads to higher prices.

Increased Manufacturing Costs

Round brilliant diamonds are the most expensive per carat because they require removing the most amount of raw material from the rough. On top of that, they also require the most skill in cutting, so labour costs are high. In contrast, an oval or emerald cut diamond makes better use of the rough stone as the cutter removes less material. 

Unmatched Brilliance

In a diamond, the internally and externally radiant light determines a diamond’s brilliance. Low-quality diamonds appear lifeless because they don’t reflect light well. Of all the common diamond shapes, the round brilliant, with its 58 facets and distinctive proportions, reflects the light most dazzlingly.

 

The 3-Month Rule

Now you know about how different shapes affect price, and you know that local markets also have an impact. But you still need to bring the question close to home: what’s the right-size budget for your engagement ring purchase?

You’ve probably heard of the ‘3-month rule’; that your engagement ring should cost three months’ salary. Any less than that, and you’re cheating your partner out of what they deserve, right? 

Wrong - no rule should govern how much you choose to spend on your ring. It’s one of the most personal purchases of your life, and what it costs should be entirely up to you. 

In the 1930s, the marketing masters at De Beers created the idea that one months’ salary was the magic number for an engagement ring. Sometime in the 1980s, this grew to two months’ salary, and today’s supposed standard lies somewhere around the three-month mark. 

To some people, a $25,000 engagement ring might seem out of reach even if they earn an annual wage of $100,000. To others, a $30,000 engagement ring is the investment they choose, even while making an annual wage of $60,000. The point is, don’t let a preconceived notion of what is the ‘right amount’ dictate your financial actions. You’re the one who has to live with your expenditures.

 

What Should You Spend on an Engagement Ring?

So what is the ‘right price?’ Is there one at all? Again, that all depends on you. Ask yourself: 

  • How much am I willing to pay to buy a high-quality, genuine diamond that my partner will cherish forever?
  • Do the quality, origins and size of the stone mean much to me? What will they mean to my partner?
  • What do my financial circumstances allow for? If I save for another six or twelve months, will I be able to afford the ring I truly want to give my partner?
  • What style of engagement ring best suits my partner’s lifestyle and personality?

 

What to Look for in a Quality Engagement Ring

You might have a generous budget of $20,000 for your engagement ring, but without a good understanding of diamond quality, you may not get the best bang for your buck. 

Every buyer should learn at least the fundamental indicators of diamond quality, the 4cs:

  • Cut
  • Colour
  • Clarity
  • Carat

The 4cs are a great place to start your research, but several other factors impact the overall quality and cost of your ring, including:

 

Natural Diamonds vs Lab-Created Diamonds

Another factor that affects engagement ring prices is the diamond’s origin. 

Diamonds are made of billions of carbon atoms, and each carbon atom is firmly bonded to four others, making diamonds the hardest known natural substance. Whether they originate deep within the earth or in a laboratory, all diamonds have the same chemical properties and molecular structure. But natural stones have a long, unique history.

Natural stones originate at depths of over 120km, through acute heat of between 900°C and 1300°C and pressures of 45 kbar and above. The miraculous process takes millions of years; eventually, the carbon molecules crystallise and become transparent. Then they travel up to the earth’s crust, mined in various parts of the world.

Because of their rough-and-tumble journey, natural stones have flaws, called inclusions. You might be surprised to hear that lab-created diamonds can and do have inclusions as well. Laboratories simulate the natural processes that the earth uses to create diamonds, so inclusions still occur due to extreme heat, pressure and individual growth patterns.

One of the most significant differences between natural and lab-grown diamonds is their price. Although they have the same molecular structure, lab diamonds typically sell for about 25 per cent less. So if you’re looking for a genuine diamond at a lower price point, a lab-created stone might fit the bill. 

As of mid-2020, the average lab-grown diamond ring with the following parameters, 18ct White Gold Solitaire, Average Weight 4.70 grams, was insured for: 

Centre stone: 1-1.09ct RBC F VS1 is $7,742

Centre stone: 2-2.09ct RBC G VS2 is $15,425

These figures give you a good indication of the value of a lab-grown diamond engagement ring.

 

Protecting Your Investment With Engagement Ring Insurance

Whether it’s worth a few thousand dollars or tens of thousands, every engagement ring is priceless when it comes to sentimental value. That’s why specialised jewellery insurance like Q Report is the smartest way to protect your jewellery investment.

With Q Report diamond ring insurance, your partner can enjoy their ring knowing they’re covered for damage, theft and loss, even while they travel around the world. And unlike home and contents insurance or travel insurance, you have the option to return to your original jeweller for replacement and repair if disaster strikes. 

To see how little it can cost you to protect the things you love with 12 months worldwide cover, get an instant online jewellery insurance quote today.


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Engagement Ring Budget Calculator

What you need to save to meet your timeframe and budget is:

This has not taken cut, colour, clarity or carat, your financial situation or your partners taste into account. There are many factors that can reduce or increase the value of an engagement ring.


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Speak with one of our Q Certified Jewellers to find out what you can afford, what your partner is looking for and what will financially work best for you.

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